VAT
VAT will return to 17.5% on 1 January 2010. The grace period for certain businesses trading across the midnight deadline to charge the lower rate has been confirmed as until either when they close, or if earlier, 6.00am.
The rates used in the Flat Rate Scheme were changed on 1 December 2009 to reflect the change in the standard rate of VAT to 15%. HMRC has taken the opportunity to re-align some of the flat rate schemes’ percentages under the guise of the re-introduction of the 17.5 per cent rate. Particular sectors adversely affected are:
Agricultural services
Post offices
Businesses supplying forestry and fishing rights
Do not assume that other flat rate percentages return to pre 1 December 2008 levels.
It should also be noted that as of 1 January 2010 the package of changes to simplify and modernise the VAT system for cross-border trading and to counter fraud will come into effect across the European Union. The package includes:
New time of supply rules for services
European Sales List (ESL) reporting for supplies of cross-border services and changes to ESLs for goods
A new electronic refund procedure for VAT incurred in other EU Member States.
These items were discussed in Budget 2009 and reported in budget notices BN75, BN76, and BN77 respectively.
Climate Change Levy
Legislation will be introduced in Finance Bill 2010 to amend the reduced rate of climate change levy from 20 to 35 per cent.
Following Royal Assent of Finance Bill 2010, secondary legislation will be introduced to require relief claimants affected by the change in the reduced rate to give their energy suppliers fresh certificates confirming their new relief entitlement.
Hydrocarbon Oils Duty Rates
The current 20 ppl duty differential for biodiesel and bioethanol will cease from 1 April 2010, and duty will thereafter be charged at the same rate as main road fuels. It was announced in Budget 2009 that main road fuels will be increased on 1 April each year from 2010 to 2013 by 1 ppl above indexation.
A relief scheme will be introduced so that producers can continue to benefit from a 20 ppl duty differential in relation to biodiesel produced only from waste cooking oil.
The scheme will allow producers to offset an allowance of 20 ppl against duty that is payable.
