VAT Bulletin NEWS: January 2015

CHANGES TO INSTRASTAT REPORTING THRESHOLDS:

With effect from 1st January 2015, the threshold at which it is necessary to submit Intrastat Supplementary Declarations has increased for ARRIVALS of goods into the UK from other countries in the EU from £1.2 million to £1.5 million.

The threshold for reporting DISPATCHES of goods from the UK to other EU countries remains at £250,000.

DIGITAL SERVICE PROVIDERS – NEW VAT RULES FROM 1st JANUARY 2015:

The VAT rules for cross border supplies to customers based elsewhere in Europe have changed such that VAT is due in the country where the customer normally lives, rather than where the supplier is established. This is intended to prevent suppliers of digital services unfairly undercutting UK based suppliers by locating in an EU member state with a lower VAT rate.

Digital services include broadcasting, telecommunications and e-services that are supplied electronically.

So that you do not have to register for VAT in every member state, HMRC have developed a ‘Mini One Stop Shop’ for UK based suppliers of digital services. This is a separate registration through which the VAT due on electronically supplied digital services delivered throughout Europe should be declared.

TIME IS UP ON PROMPT PAYMENT DISCOUNTS:

The Revenue and Customs Brief 49 (2014) provides guidance on what to do when you issue or receive a VAT invoice offering a Prompt Payment Discount on or after 1 April 2015. Under the current legislation, suppliers offering such discounts were able to show and account for the VAT on the discounted value (regardless of whether the prompt payment discount was taken up). Customers could only reclaim the VAT on the discounted value (i.e. as per shown on the invoice), regardless of whether they had paid the undiscounted amount.

However, from 1 April 2015, suppliers must account for VAT on the amount actually received and suppliers may reclaim the VAT based upon the amount actually paid to the supplier.

More specific guidance is contained in the aforementioned Brief for both suppliers and customers, on what must be done if a customer subsequently takes up the prompt payment discount.

SIMPLIFIED IMPORT VAT ACCOUNTING (SIVA) – QUALIFICATION CRITERIA IS SIMPLIFIED:

SIVA enables businesses to apply for a reduction to nil in the level of guarantee required to secure the deferment of the payment of import VAT due on imported goods. However, in the past, in order to qualify, businesses were required to have been registered for VAT for three years with a continuous trading history.

If your require further information, please contact our VAT Team on enquiries@dains.com or call 0800 298 3899.