Excise Duties, Environmental and Transport Taxes
The Annual Investment Allowance (AIA) allows businesses, regardless of size, to reduce their taxable profits by the full amount of their annual capital expenditure on most plant and machinery (apart from cars), up to a maximum amount of £50,000 each year.
In order to provide further cash flow support and an incentive to increase business investment, the Government will increase the maximum amount of the AIA to £100,000 from 1 April 2010 (for corporation tax) or 6 April 2010 (for income tax). Capital expenditure above this threshold will continue to be eligible for standard capital allowances against taxable profits.
The Government is also introducing a Targeted Anti-Avoidance Rule (TAAR) from 24 March 2010, to focus this measure on supporting genuine business investment.
HMRC and businesslink.gov.uk provide a range of services for start-ups including online tools, video guides and factsheets. By autumn 2011, we will launch a new personalised area for start ups on Businesslink.gov.uk, which will provide easy access to enhanced guidance and tools to help businesses find the support they need when setting up. It will include a tax registration 'wizard' that enables registration for multiple taxes, online services and payment plans using a single interactive online form.
Building on this, HMRC will provide an online facility, by the end of 2011, that provides SMEs with a single view of their current tax liabilities or repayments across the main taxes, and reduces the number of times they have to provide the same information (e.g. address updates) to HMRC.
Delivering a new relationship with business
The Government believes progress can be made, alongside a package of regulatory measures that it is developing to reduce the risks and impact of future financial crises, on developing an internationally co-ordinated systemic risk tax on financial institutions.
The Government has set out in the Budget the key principles that it believes should guide further international work on systemic risk taxes. These are:
The Government announced in the Budget its intention, subject to State aid approval, to introduce a new tax relief for the UK video games industry. This will support game development by the UK video games industry. It will be introduced once the detailed design has been settled, and the relief approved by the European Commission as State aid. The Government will be consulting later this year on the design of the new relief.
For the financial year commencing 1 April 2010 the small profits rate of Corporation Tax remains at 21 per cent for all profits apart from ring fence profits and 19 per cent for ring fence profits. The marginal relief fraction remains at 7/400ths for all profits apart from ring fence profits and 11/400ths for ring fence profits.
For the financial year commencing 1 April 2011 the main rates of corporation tax are set at 28per cent for all profits apart from ring fence profits and 30 per cent for ring fence profits.
At Budget 2009, the Chancellor announced that the Furnished Holiday Lettings (FHL) rules would be withdrawn from 6 April 2010, (or from 1 April 2010 for companies). The legislation for this is in Finance Bill 2010. This will mean the tax treatment of furnished holiday lettings will be the same as for other property rental businesses.
As announced at the 2009 Pre-Budget Report, from 6 April 2011 the tax exemption that can apply to the benefit of free or subsidised meals provided by employers will be restricted in certain circumstances. This will be for canteen salary sacrifice and flexible benefit arrangements in which the employee has a structured contractual entitlement to the benefit of canteen meals instead of cash salary. The existing benefits rules will then be applied to meals that become taxable and liable to NICs as a result of this change.
The taxable turnover threshold, which determines whether a person must be registered for VAT, will increase from £68,000 to £70,000, from 1 April 2010. The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £66,000 to £68,000. The registration and deregistration limits for relevant acquisitions from other European Union Member States will also be increased from £68,000 to £70,000.
The Business Payment Support Service (BPSS) - giving people streamlined access to request Time to Pay their tax - introduced at the 2008 Pre-Budget Report to support viable businesses experiencing temporary financial difficulty, is to continue. The service is available for all HMRC taxes, including VAT, Corporation Tax, Income Tax and NICs and PAYE.
HMRC will require businesses seeking Time to Pay (TTP) arrangements for arrears of £1million or more, to provide an Independent Business Review (IBR) in support of their request. It is expected that the new requirement will be implemented from April 2010 and HMRC will informally consult on how this will work. IBRs will be relevant to less than one quarter of 1% of businesses seeking time to pay which is a very small minority of businesses with substantial debts. There will be no change for all other businesses. HMRC will continue through The Business Payment Support Service (BPSS) to provide help and support on the same principles as before. And those same principles will continue to apply to businesses with large debts.
Legislation in the Finance Bill 2010 will introduce powers for HMRC to require a financial security from employers who have a history of serious non compliance in terms of paying late or not paying their pay as you earn (PAYE) income tax. The detail will be set out in regulations, which will be published for consultation before they are made. The measure will affect those who are determined not to pay and will not affect those who need time to pay and who make payment arrangements with HMRC.
The amendments to the Double Tax Relief (DTR) rules in the Taxation (International and Other Provisions) Act 2010 (TIOPA) will ensure that a person may only deduct foreign tax from any foreign income where that person has included the foreign tax in his taxable income. Other amendments to TIOPA will reaffirm the scope of the targeted DTR anti-avoidance rule.
The Government will be taking action to prevent attempts to avoid tax and National Insurance contributions through the use of Employee Benefit Trusts and other arrangements to disguise payments of remuneration and intends to introduce anti-avoidance legislation to take effect from 6 April 2011.
Legislation will be introduced in Finance Bill 2010, to come into force in the autumn, to strengthen and improve the DOTAS Regime. These changes will ensure that HMRC continues to obtain early information about avoidance risks and that there are sufficient sanctions to penalise those who do not comply with the regime.
HMRC has published a discussion document on whether to introduce a generic rule to counter schemes creating tax mismatches within a group as a result of the differing tax treatments of loans or derivatives
With effect from the announcement made on 21 October 2009, legislation will be introduced to prevent abuse of the rules on Sideways Loss Relief. HMRC published draft legislation, an explanatory note and guidance for this change on 21 October 2009.
Legislation will be introduced in Finance Bill 2010 to replace the existing transactions in securities legislation with clearer legislation targeted more effectively at arrangements involving income tax avoidance.
Legislation will be included in Finance Bill 2011 amending the rules governing which companies are associated for the purposes of access to the small companies' rate of Corporation Tax and marginal small companies' relief. The specific area to be amended is the rules which attribute the rights held between associated persons, for the purposes of establishing who has control over a company. No change to any other aspect of associated company rules is proposed.
Following the announcement in the 2009 Pre-Budget Report (PBR), legislation in Finance Bill 2010 will introduce the bank payroll tax. The tax applies, broadly, to banks and building societies on awards of bonuses over £25,000 made to, or in respect of, certain of its employees in the period from 9 December 2009 to 5 April 2010. It will be chargeable at a rate of 50 per cent on the aggregate excess of bonuses of £25,000 or more awarded in the period. There will be no change in the tax treatment of bonuses received by individuals.
The principal changes to the draft legislation published at PBR 2009 are:
The Government has decided to bring forward revenue protection legislation to:
Both changes will have effect from 1 April 2010.
The Government has announced a 100 per cent First Year Allowance (FYA) for business expenditure on new and unused (not second hand) zero-emission goods vehicles. The Government intends to legislate this change in a Finance Bill to be introduced as soon as possible in the next Parliament.
Legislation is planned for a Finance Bill to be introduced as soon as possible in the next Parliament which will put beyond doubt the Corporation Tax treatment of certain distributions received by UK companies. The new legislation will mean that distributions will not be prevented from falling within the distribution exemption regime at Part 9A of the Corporation Tax Act 2009 simply because they are capital in nature.
The Government is considering changes for alternative property refinance arrangements that do not include payment of interest, so that they have the equivalent tax treatment to conventional loans.
The Government announced today that it would defer, to the autumn, its response to the 2009 consultation on charity pooled funds to consider how to better regulate them whilst preserving existing tax reliefs. They are currently authorised and regulated by the Charity Commission (CC).
The Government intends to amend the corporation tax consortium relief rules and legislate this measure in a Finance Bill to be introduced as soon as possible in the next Parliament. The intended amendments relate to two areas of consortium relief:
Q1 - How are the 'link company' rules to be changed?
A1 - Currently only companies within the scope of UK
Corporation Tax can be 'link companies', the intended change would amend
this so that all EEA resident companies who are members of a UK consortium
can be 'link companies'
Q2 - How are the rules governing allocation of consortium
loss between members to be changed?
A2 - The proportion of a consortium's losses which a
member has allocated to it is currently limited to the lowest of the following
three percentages: ·
Q3 - What is this change to loss allocation rules intended
to achieve?
A3 - To stop artificial arrangements that use different
classes of consortium share to give a member or members access to a proportion
of losses in excess of that which their actual level of involvement/control
in the consortium should entitle
The CFC regime provides anti-avoidance rules which protect the UK corporation tax base from erosion. The new CFC rules to be introduced as a consequence of the reform process will be targeted on artificial diversion of UK profit and not on taxing profits that are genuinely earned in overseas subsidiaries. Following the publication of a discussion document in January 2010, a consultation period is running to 20th April 2010. The intention is to introduce the new CFC regime in FB2011.
HMRC and HM Treasury issued a joint consultation document on 22 February 2010 on simplifying Capital Gains rules for groups of companies. The consultation document contains detailed proposals to simplify the rules on value shifting, the treatment of capital losses after a change of company ownership and degrouping charges.
The 2009 Pre-Budget Report announced the introduction of a Patent Box applying a 10 per cent Corporation Tax rate to patent income from 2013. A consultation on the design of the Patent Box will be issued in time for legislation in Finance Bill 2011.
Changes are being made to certain aspects of the 'Worldwide Debt' cap rules, which were enacted last year, to resolve issues that have emerged in consultation. The 'Worldwide Debt cap" formed part of the reform of the taxation of foreign profits of companies, which the Government introduced last year. The legislation guards against excessive debt funding of UK resident companies by restricting relief for UK financing costs where these exceed the financing costs of the worldwide group. Continuing consultation has revealed a number of areas where, in the light of the practical application of the debt cap, changes to the legislation are needed. The Government intends to legislate this measure in a Finance Bill to be introduced as soon as possible in the next Parliament. The majority of the changes will have effect for periods of account of the worldwide group beginning on or after 1 January 2010 - the start date of the original legislation.
This annual update reports significant progress against HMRC's targets to reduce administrative burdens. It also includes other ways that HMRC is supporting businesses (in particular new start-ups) to understand their obligations and what to do to meet them.
Delivering a new relationship with business
The 100 per cent first year allowance, the 'Enhanced Capital Allowance (ECA)', schemes for energy saving technologies will be expanded to include two new sub-technologies: (Permanent Magnet Synchronous Motors and Biomass fired warm air heaters). One existing technology (Compact heat exchangers) and one sub-technology (Liquid pressure amplification) will be removed. The criteria for taps and showers in the Water Efficient scheme will be tightened. The changes will take effect from a date to be appointed by an Order, expected to be laid in the next Parliament.
EMI rules will be amended to remove the requirement that there is a qualifying trade carried on wholly or mainly in the UK, and will be replaced with a requirement that the company has a permanent establishment in the UK. Alternatively, at least one company in the group that is carrying on a 'qualifying trade' within the meaning of the legislation must have a 'permanent establishment' in the UK. The Government intends to legislate this measure in a Finance Bill to be introduced as soon as possible in the next Parliament. The change will have effect in respect of EMI options granted on or after the date the legislation receives Royal Assent.
UK charity tax reliefs are being extended to organisations equivalent to charities and Community Amateur Sports Clubs (CASCs) in the EU and in the European Economic Area (EEA) countries of Norway and Iceland following a judgment in the European Court of Justice (ECJ) in January 2009. A number of changes to the law and processes are being introduced at the same time. These will:
The Government intends to legislate in a Finance Bill to be introduced as soon as possible in the next Parliament to ensure that the amount of tax credit claimable where a film is produced over more than one period does not depend on the spending pattern. To achieve this, the losses made will be cumulated by bringing in the concept of a 'Relevant Unused Loss (RUL)'. RUL will be any available loss not previously surrendered or set against profits. This will ensure that losses made in an early period are not stranded. The amendment will be deemed to always have had effect for accounting periods ending on or after 9 December 2009.
As announced at 2009 Pre Budget Report, companies and groups holding Index-Linked Gilt edged securities (ILGs) that enter into arrangements such that they are not exposed to the inflationary aspect of holding the ILG will no longer benefit from the tax-free uplift in carrying value. The legislation is proposed to have effect with respect to increases in retail prices index that impact on the carrying value of an ILG that fall after the date of announcement at 2009 Pre-Budget Report, 9 December 2009.
Following the introduction of the tax regime for Funds investing in FINROFs, the Government will continue to work with industry to address the tax issues that potentially act as a barrier to investments in 'mixed funds'.
As announced at the 2009 Pre-Budget Report, where companies and groups enter into arrangements that seek to pass on exchange risk to the Exchequer ('overhedging' and 'underhedging' structures), any losses, other than the real economic loss at group level, resulting from those arrangements will be ring-fenced. The proposed legislation will have effect for accounting periods beginning on or after 1 April 2010. Transitional rules will apply where there are arrangements and/or accounting periods that straddle this date.
It was announced in the 2009 Pre-Budget Report that legislation would be introduced in Finance Bill 2010 to prevent avoidance involving fees charged under a separate contract and draft legislation was published for comment. Following further consultation with industry representatives, revised legislation has been published to close this loophole, which takes effect from today, 24 March 2010.
A consultation document was published on 5 March 2010 which invites views on possible changes to the rules on the collection of Income Tax deducted at source from interest and similar payments.
The Government announced that it intends to work with industry to develop a tax transparent fund vehicle and will hold a formal consultation, with a view to legislating in Finance Bill 2011.
The Government intends to review the tax legislation for investment trust companies with a view to modernising the rules. A consultation document will be issued in summer 2010.
This measure, to modify the rules for apportioning the income and gains of a non-profit fund between categories of insurance business, was announced at 2009 Pre- Budget Report. A technical note published at Budget gives details of an anti-avoidance rule to form part of the legislation. The Government has announced its intention to modify the transfer of business rules as soon as is practicable.
Legislation will be introduced in Finance Bill 2010 to allow HM Treasury to address unintended tax impacts if action is taken by the FSCS to protect policyholders with non-pension related insurance or annuity contracts. This will have effect on and after the date that Finance Bill 2010 receives Royal Assent. Once the regulations have been made, they can apply to an earlier period, provided they do not increase any person's tax liability.
A Written Ministerial Statement (WMS) was made on 14 October 2009, that legislation will be introduced in Finance Bill 2010 to change the loan relationships rules that apply to connected companies. The effect of these changes will be to prevent companies not in financial difficulties from buying back debt at a discount to the amount borrowed, without being subject to tax, unless the debt is exchanged for new debt of the same value or for the issue of ordinary shares.
The Treasury laid Regulations relating to the tax consequences of transfers of business by mutual societies on 10 November 2009. The Regulations will assist the successful implementation of the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007 and also address tax issues for pre-existing and continuing transfer rules. They ensure that tax does not act as a barrier to transfers of engagements between mutual societies and/or to demutualisations, providing a level playing field within the sector where appropriate and improving competition. The Regulations came into force on 1 December 2009, in the most part retrospective to 22 April 2009.
The measure ensures reinvestment relief can apply as intended in a group context when the company making the reinvestment is not the company making the disposal.
The Government is changing the chargeable gains treatment for investments in certain offshore contract-based funds held by corporate investors, which take effect from 1 April 2010.
Following the introduction of the new Offshore Funds regime (announced at Budget 2009) on 1 December 2009, the Government introduced amendments to the regulations which came into effect on the same day in order to assist with transitional provisions. The purpose is to allow the new provisions and the previous legislation to work together during a transitional period. The Government continues to work with industry to identify and rectify other minor issues with the new offshore funds regime.
This measure amends existing legislation to ensure that postponed gains are brought back into charge when an overseas branch of a UK company transfers assets to a non-resident company. The change is effective for disposals of securities on or after 6 January 2010.
Changes are proposed to the Stamp Duty Land Tax and Petroleum Revenue Tax error or mistake legislation. These follow similar changes to the Income Tax, Capital Gains Tax (CGT) and Corporation Tax rules in FA2009. Draft legislation has already been published and comments were invited. The proposed changes are modelled on the Income Tax, CGT and Corporation Tax legislation contained in Schedule 52 FA 2009. They will prevent alternative claims for repayment, e.g. common law claims, and will have a four year time limit. The new rules will come into effect on 1 April 2011 to allow a transitional period during which claims will be possible under the current rules.
The Government intends to legislate in a Finance Bill to be introduced as soon as possible in the next Parliament to bring VAT, Insurance Premium Tax, Aggregates Levy, Climate Change Levy, Landfill Tax and Excise Duties within the late filing and late payment penalty regimes. This will complete the legislative programme started in Finance Act 2009.
The Government announced at the 2009 Pre-Budget Report that legislation will be introduced to abolish the condition requiring that any IP deriving from the Research and Development (R&D) be owned by the company making the claim, with effect for accounting periods ending on or after 9 December 2009.
The Government intends to legislate in a Finance Bill to be introduced as soon as possible in the next Parliament, to allow REITs to issue stock dividends in lieu of cash dividends in meeting the requirement to distribute 90 per cent of the profits from the REIT's property rental business.
The Corporation Tax rules on loan relationships will be amended to deny a close company a deduction for the release or writing off of a loan to a participator in that company. The measure has effect for debt (or part debt) releases or write-offs on or after 24 March 2010.
Legislation - announced on 9 February 2010 - will clarify the Corporation Tax treatment of manufactured payments received in the course of sale and repurchase (or 'repo') transactions. The proposed legislation puts beyond doubt that amounts to be brought into account for tax purposes by companies in respect of manufactured payments are those that are taken into account in accordance with generally accepted accounting practice. As originally announced, the Government proposes that this legislation will have effect from the date the 'repo' rules were introduced, 1 October 2007.
Legislation will be introduced in Finance Bill 2010 to offer an option to elect for an alternative treatment to that imposed by the original legislation on the sale of a lessor company. Draft legislation was published at 2009 Pre-Budget Report; this will be amended to ensure that the election operates fairly and that the full amount of tax will be collected on the profits of the leasing business following the sale.
HMRC will work with the investment management industry with a view to including as 'exempt investments' for Schedule 19 Stamp Duty Reserve Tax purposes, certain investments by a Collective Investment Scheme (CIS) in another CIS.
The Government has issued a consultation document on the tax implications for insurance companies of the implementation of the EU Solvency II Directive, expected in 2012.
The International Accounting Standards Boards has issued proposals to amend the accounting standard on financial instruments ('IAS 39'). Changes to IAS 39 will have a significant impact on the corporation tax rules on loan relationships and derivative contracts, which are based closely on the profit or loss shown in accounts drawn up in accordance with Generally Accepted Accounting Practice (GAAP). Finance Bill 2010 will contain a regulation-making power to allow necessary changes to be made to the tax rules as and when the accounting changes are announced, and for any period to which they apply.
The Government will legislate in the next Parliament the final four changes to the Enterprise Investment Scheme and Venture Capital Trust schemes agreed with the European Commission as a condition for their approval as State aids. It will not go ahead with the proposal made at 2009 Pre-Budget Report to define qualifying companies by reference to the EU definition of Small Enterprises; it also intends to work with industry to examine the evidence base for possible improvements to the schemes.
The Government intends to extend the Aggregates Levy Credit Scheme in Northern Ireland for ten years, from 1 April 2011. This measure will be legislated in a Finance Bill to be introduced as soon as possible in the next Parliament.
The rate of aggregates levy will increase from £2.00 per tonne to £2.10 per tonne with effect from 1 April 2011.
As announced at the 2008 Pre-Budget Report, APD rates for the four destination bands will increase from 1 November 2010. This change will apply to flights departing from the UK (subject to certain exemptions) on or after 1 November irrespective of when the flight was booked or purchased. A list of countries by destination band is contained in Appendix 1 of HMRC Notice 550, Air Passenger Duty, which is available on HMRC website.
Legislation will be introduced in Finance Bill 2010 to increase the rates of CCL broadly in line with inflation to:
| Taxable commodity | Rates |
| Electricity | £ 0.00485 per kilowatt hour |
| Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility | £ 0.00169 per kilowatt hour |
| Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state | £ 0.01083 per kilogram |
| Any other taxable commodity | £ 0.01321 per kilogram |
Legislation will be introduced in Finance Bill 2010 to provide a power to amend the definition of cider which may be needed in order to protect the integrity of the cider definition.
Legislation will be introduced in Finance Bill 2010 to provide for the annual setting of duty rates for Alcohol. Duty rates for all still ciders, and sparkling cider exceeding 1.2 per cent alcohol by volume (abv) but not exceeding 5.5 per cent abv, will increase by 10 per cent above inflation. Duty rates for all other alcoholic drinks will increase by 2 per cent above inflation. The Small Brewers Relief scheme will continue to provide 50 per cent duty relief to the smallest brewers.
Legislation will be introduced in Finance Bill 2010 to:
Budget 2010 announces that the 2010-11 increase will be implemented in stages in order to ease pressure on incomes at a time when other prices are rising. The main fuel duty will increase by 1p per litre on 1 April and 1p per litre on 1 October 2010, then by 0.7p per litre on 1 January 2011, with consequential effects on rebated fuels and road fuel gases. The main fuel duty will increase by a further 1p per litre above indexation in April 2014 with consequential effects on rebated fuels and road fuel gases. The duty on leaded petrol is increased by the same amount as main road fuels, 1p per litre on 1 April and 1p per litre on 1 October 2010, then by 0.76p per litre on 1 January 2011, and that duty on aviation gasoline is increased by 3.78p per litre on 1 April 2010.
The way long cigarettes are treated for duty purposes is to be changed. Where cigarettes are longer than 8cm (excluding tip), each additional 3cm (or part thereof) is treated as another cigarette for duty purposes. For example a cigarette 12cm in length would be treated as three cigarettes. This is a technical change which is designed to stop a tax avoidance method.
The rates of Tobacco Products Duty (that is the duty on cigarettes, cigars, hand rolling tobacco, other smoking tobacco and chewing tobacco) have been increased by 1% in real terms with effect from 6pm on Budget day.
The maximum credit that landfill site operators may claim against their annual landfill tax liability for contributions to enrolled environmental bodies under the LCF will change from 6 per cent to 5.5 per cent with effect from 1 April 2010. This should result in an increase to the maximum value of the LCF in line with inflation, from £72 million in 2009-10 to a potential value of £74.25 million of credit claimable for 2010-11.
The Government has announced its formal response to the Budget 2009 consultation on modernising landfill tax legislation. In summary:
The standard rate of landfill tax will increase by £8 per tonne to £56 per tonne for relevant disposals of waste made, or treated as made, on or after 1 April 2011. The increase was announced at Budget 2009 when the Government indicated that the rate would increase by £8 per tonne on 1 April each year from 2011 to 2013 (inclusive). Budget 2010 announced that the standard rate will increase by a further £8 per tonne in 2014-15.
Finance Bill 2010 will introduce a duty on Landlines (local loops). It will be payable from 1 October 2010 at a rate of 50 pence per month. The duty will apply when the local loop is made available for use and will be payable by the owner of the local loop. The owner of the local loop may recoup the duty from the wholesaler, retailer or end-user. People on an officially recognised social telephony scheme will be exempt from the duty. Lines used exclusively for television services will be exempt.
This measure updates the compliance checking framework for excise duties, covering information and inspection powers, record-keeping rules and time limits. The Government intends to legislate this in a Finance Bill to be introduced as soon as possible in the next Parliament.
Corporation Tax (except for quarterly instalment payments) and Petroleum Revenue Tax are to be brought within the harmonised interest regime. This will complete the legislation started by Finance Act 2009.
Some companies and individuals currently exploit the SDLT partnerships rules by artificially reducing the SDLT payable on some land transactions. Legislation will be introduced in Finance Bill 2010 to ensure that the existing SDLT anti-avoidance rules apply to transactions undertaken by partnerships. The legislation will have effect for transactions on or after 24 March 2010 (subject to transitional rules).
Changes are proposed to the SDLT and Petroleum Revenue Tax error or mistake legislation. These follow similar changes to the Income Tax, Capital Gains Tax (CGT) and Corporation Tax rules in FA2009. Draft legislation has already been published and comments were invited. The proposed changes are modelled on the Income Tax, CGT and Corporation Tax legislation contained in Schedule 52 FA 2009. They will prevent alternative claims for repayment, e.g. common law claims, and will have a four year time limit. The new rules will come into effect on 1 April 2011 to allow a transitional period during which claims will be possible under the current rules.
Members of clearing houses are to be covered explicitly in enabling legislation for regulations that remove multiple charges to Stamp Duty and SDRT when share trades are cleared through central counterparties.
This measure aims to prevent avoidance of the higher rate Stamp Duty Reserve Tax (SDRT) charge that applies when chargeable securities are issued to a clearance service or depositary receipt system. Provisions will be introduced in Finance Bill 2010 to remove the SDRT exemptions where chargeable securities intended for non-EU markets are initially routed through an EU clearance service or depositary receipt issuer prior to transfer to a non-EU clearance service or depositary receipt issuer.
HMRC will work with the investment management industry with a view to including as ‘exempt investments' for Schedule 19 Stamp Duty Reserve Tax purposes certain investments by a CIS in another CIS.
The VAT Fuel Scale Charge system is a simplified means of taxing the private use of business fuel. The scale charges are amended annually in line with average fuel costs. The system provides businesses with a figure for the average fuel expenditure on private mileage. This is based on the average cost of fuel per kilometre and the average distance covered per vehicle each year on private journeys. The charge is VAT inclusive and the taxpayer accounts for the VAT element as output tax on their VAT return. The scale charges have been updated to reflect changes in fuel prices.
Legislation will be introduced to change, from 1 September 2010, the definition of aircraft that can be supplied at the zero-rate from one based on weight and usage to one based on the status of the customer. Supplies of aircraft will be zero-rated only where used by airlines operating for reward chiefly on international routes. Supplies to State institutions are not affected by the change.
The Government recognises the efficiencies that can be achieved by organisations such as charities sharing services and the potential VAT barrier that exists. The Government will work with charities and other affected sectors to consider options for implementing the EU cost sharing exemption.
The measure implements EU changes to the Place of Supply rules for natural gas and electricity. The existing rules are to be amended from 1 January 2011 to:
This measure restricts the VAT exemption for postal services to the supply of public postal services by a Universal Service Provider (USP). It also updates the zero-rating for passenger transport services to reflect the status of the provider of a passenger transport service made in conjunction with its postal services. This change will have effect from 31 January 2011.
Legislation in Finance Bill 2010 will allow the reverse charge to combat VAT Missing Trader Intra-Community (MTIC) fraud for goods to apply equally to services. A Reverse Charge will be introduced for supplies of emissions allowances, from 1 November 2010, the effect of which will be that a VAT registered business purchasing allowances will account for and pay the VAT chargeable instead of the supplier. This will replace the interim zero-rate introduced in July 2009.
Legislation will also provide an option for the introduction of reporting requirements to deal with fraud in the services sector. There will not be any additional reporting requirements for emissions allowances so suppliers will not be required to provide 'Reverse Charge Sales Lists' for supplies of emissions allowances.
This measure deals with VAT recovery on immoveable property, boats and aircraft where there is private use of the asset. In addition, it ensures revenue is protected in respect of existing Lennartz accounting arrangements.
Following consultation, HMRC has announced two changes to simplify the partial exemption de minimis rules and some minor changes to simplify the option to tax legislation. All the changes take effect from 1 April 2010.
This annual update reports significant progress against HMRC's targets to reduce administrative burdens. It also includes other ways that HMRC is supporting businesses (in particular new start-ups) to understand their obligations and what to do to meet them.
