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VAT and the budget - some things you may have missed

Peter Hughes
One of UK Training’s VAT experts, Peter Hughes, has carefully examined the detail of the budget delivered by George Osborne on 21st March 2012. Peter explained to me some of the changes that will affect VAT. Many of these changes will be in place as early as 1st October 2012.

One measure is to remove the distinction between food that is heated to keep it fresh and food that is intended to be eaten hot. All hot food, except freshly-baked bread, will become standard rated.

Another measure will be to remove the zero rating of food which is not eaten on the premises of the retailer but within a shared facility in a shopping mall. In future these will be treated the same as food eaten on the premises of the retailer and therefore standard rated.

The government also intends to remove the zero rating of sports nutritional drinks and make them standard rated.

Then there is the rental of hairdressers’ chairs which are often exempt on the basis that they are a supply of land. This will no longer be the case, again they will become standard rated.

The VAT treatment of caravans is being changed so that only those used for residential purposes will be zero rated. Those that are sold as holiday caravans will be standard rated.

A controversial move is the proposed change to the VAT treatment of alterations to listed buildings which are used for residential or charitable purposes. Again these have benefited from being zero rated supplies – in the future they will be standard rated.

A further measure will affect the installation of energy-saving materials in buildings used for charitable purposes. These supplies are currently subject to the reduced rate of 5%. It is expected that in 2013 these will become standard rated.

Finally the UK is coming in line with most of the other EU countries. Currently overseas businesses do not have to register for VAT in the UK unless their UK supplies exceed the UK VAT registration threshold. From December this will no longer be the case – all overseas businesses that make UK supplies will need to register for VAT in the UK.

I hope this gives you a heads up on the detail that did not hit the headlines.

Stephen Smith
Managing Director
UK Training (Worldwide) Ltd

P.D. Hughes Consultancy Services

Peter Hughes is a Chartered Accountant who has his own private practice. He specialises in advice to businesses, helping them comply with many regulatory requirements and financial reporting standards.

Peter regularly presents our VAT and Financial Reporting Standards seminars.  He is an excellent researcher giving him the skills to deal with many complex and obscure matters that many businesses have to address.  He has designed and developed many training courses for clients, examining issues that would not normally be covered in our public seminars.

For more details of the services that Peter provides for his clients please go to his website.




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