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Budget possibilitiesThe Chancellor’s Budget is widely expected to increase personal taxes, with and increase in national insurance contributions and possibly a freezing of personal allowances being seen as the most likely and least politically sensitive approach. It is unlikely that the scope of VAT will be increased, and almost inconceivable that the Chancellor would follow the International Monetary Fund’s recommendation to put VAT on food. The Chancellor is already on record as promising to reduce the corporation tax burden on small businesses and to build on measures to reduce the cost of starting a business. Larger companies can look forward to tax relief on research and development costs being extended. Motor vehicles for disabled peopleA revised notice has been released explaining changes to VAT relief available for adapted motor vehicles from April 2001. It describes which motor vehicles can be zero-rated, who can purchase or hire a zero-rated vehicle and what documentation has to be produced. Wartime compensation paymentsThe Inland Revenue has extended extra-statutory concession F20 in respect of wartime compensation payments. The ESC was introduced last year for those who suffered under the Japanese in the Second World War. This has been extended to include payments under schemes to compensate those who suffered under the Nazis. Continued aid for businesses affected by Foot and Mouth DiseaseThe Government’s revenue departments have acknowledged that although the UK is officially now free of the disease, the economic effects and financial difficulties caused by the outbreak are still very much a reality for many businesses. The following help will therefore remain available: · Rescheduling of VAT payments · Negotiation payment plans to avoid the accumulation of tax debts · Deferring tax, VAT and NIC payments, where it can be demonstrated that business is still being adversely affected by the disease The revenue departments operate a help line to discuss how they might aid affected businesses: or alternatively, if you need to discuss the matter please give us a call. IR 35 mileage allowancesPeople working through service companies that fall within the intermediaries legislation will be entitled to claim the same level of tax-free payments for business mileage as employees under the approved mileage allowance payments scheme. The necessary amendments to legislation will be included within this year’s Finance Bill and will take effect from 6 April 2002. IR 35 ceasing to tradeThe intermediaries’ legislation is to be amended to allow service companies to claim relief in their final corporation tax accounts for the deemed payment calculation. IR 35 – PartnershipsThe intermediaries legislation is to be amended to allow partnerships, which reimburse expenses incurred by a partner to claim relief for those expenses in the same way as an incorporated business. Car fuel benefit tableThe taxable value of the provision of free fuel for use in a company car for 2002-2003 is set out below: Petrol £ Diesel £
1400cc or less 2,240 2,850 1401cc to 2000cc 2,850 2,850 More than 2000cc 4,200 4,200
Cars without a recognised cylinder capacity:
£4,200. 100% capital allowances on energy saving equipment Finance Act 2001 introduced an enhanced capital allowance of 100% first year allowance for expenditure on designated energy-saving equipment. The Inland Revenue has released guidance notes on the operation of the enhanced allowance. Qualifying technologies and products are set out in the energy technology criteria list, which also sets out the criteria that must be met in each technology class and the products that have been certified as meeting those standards. It should be noted that second-hand plant and machinery or equipment purchased to lease or let to other businesses do not qualify for enhanced capital allowances. The technology classes are as follows: Combined heat and power Boilers and boiler add-ons Lighting Pipe insulation Motors Variable speed drives Thermal screens Refrigeration equipment This is a specialised area - if you require any assistance please give us a call. VAT and Internet service packagesAll internet packages from 1 July 2003 will be subject to VAT irrespective of the of the supplier and/or the balance between the consistent elements of the package which have a mixture of differently taxed elements. Internet Service providers located outside the European Union will have to account for VAT on supplies within the European Community. VAT and residential careThe High Court has upheld the decision in the Kingscrest care case. This decision threatened to allow care homes to put VAT on top of the fees they charge their residents. The Government has consequently introduced legislation, which puts the exemption for residential care beyond doubt and thus ensures that it will remain free of VAT. VAT – Land & PropertyH M Customs & Excise has published additional information and issued clarification of current policy in respect of the option to tax. The notice sets out some minor changes, particularly to the conditions for automatic permission to opt, to give a greater degree of certainty to businesses in this difficult area of VAT legislation. If you are unsure whether the legislation could apply to you or be beneficial, please contact us. VAT Increase Impact On CharitiesThe Charities Finance Directors group has voiced concern over the impact of rumoured changes to increase the rate of VAT to 20% in the Budget would have on the charities sector. As most charities are unable to recover any VAT incurred the impact could be substantial. The group has also raised the point that any increase in national insurance contributions could also impact already stretched resources. Customs duty on defective goodsThe Customs Code Committee has agreed to allow customs authorities to consider authorising repayment of customs duty where, in accordance with the terms of a warranty, the price to a buyer is reduced because of the defective nature of imported goods. The defect must have been present at the time of acceptance and the adjustment to price implemented within 12 months. Claims have to be lodged with Customs & Excise within three years. Common Agricultural Policy (CAP) exportsA revised notice has been released to improve and clarify earlier releases. The changes following the implementation of the new export system have been incorporated, in particular the demise of the Inland Grain and Inland Meat schemes. The notice explains Customs export procedures for Common Agricultural Policy goods. It also gives details of CAP export licences obtainable from the Rural Payments Agency. A declaration of value on forms C105A/C109A is required for imports of goods into the European Union, which are chargeable to ad valorem duty. This requirement was waived where the value of a consignment of goods did not exceed €5000. The threshold has been increased to €10,000 (approximately £6,500) from 19 March. The Aggregates Levy started on 1 April 2002 following consultation with the quarrying and aggregate industry the Government has announced technical changes to facilitate the operation of the Aggregates Levy. The main changes are as follows: 1. Definition of “aggregate” the definition now extends to all rock used as aggregate regardless of whether it has been crushed. 2. Definition of “dimension stone” this definition has been clarified to include any rock that has been cut to produce one or more flat surfaces. The cutting of rock to produce dimension stone is defined as an exempt process. 3. Industrial mineral waste a) China and ball clay overburden will now be subject to the levy b) Certain industrial minerals aggregates arising as waste material from the processing of industrial minerals are exempt from the levy. There are a number of further minor changes to the legislation. If you require further information please give us a call. |