Within the 2014 UK budget, the chancellor of the exchequer has announced a number of changes in the area of VAT.
As we have previously announced, the changes to the place of supply of electronically supplied services will be introduced in the UK from 1 January 2015. Full details of the changes can be found here.
UK legislation is to be brought into line with EU legislation on the subject of prompt payment discounts offered to customers. Currently, where a business makes a taxable supply and offers a prompt payment discount to the customer, UK output tax is calculated on the discounted amount even if the discount is not taken. However, under the new rules the supplier will be required to account for output tax on the full price of the supply. If a discount is subsequently given, the supplier will then adjust their VAT figures accordingly. These changes are due to be introduced with effect from 1 April 2015.
The VAT registration and deregistration thresholds for UK established businesses have also seen an increase. The VAT registration threshold has been raised to £81,000, with the deregistration threshold being increased to £79,000, both with effect from 1 April 2014.
The government will seek to extend the reverse charge provisions to wholesale supplies of gas and power in order to prevent missing trader intra-community fraud. Therefore VAT registered customers rather than suppliers will be responsible for accounting for VAT.