Larking Gowen weekly digest – latest news on direct/indirect tax, financial reporting and more…
VAT and indirect taxes
Stamp Duty Land Tax: HMRC have updated the application form for a refund of the 3% surcharge on additional residential properties.
OTS Interim report on review of VAT: As announced during the 2016 Autumn Statement, the Office of Tax Simplification (OTS) has been asked to conduct a simplification review into the UK VAT system. This week they published their Interim Report which covers 8 broad areas, including VAT rates, VAT schemes and partial exemption.
The report reads more like a discussion document, which raises numerous questions for stakeholders such as businesses and tax professionals to respond to. Unfortunately the report contains no clear recommendations, or any obvious clues towards the future direction of VAT. With Brexit on the horizon, it's difficult to envisage any significant changes taking place in the short term, however, the results of this review could hugely influence the post Brexit VAT landscape.
We will of course keep you updated with the progress of the review, and will provide further information as soon as it is available.
Changes to the Flat Rate VAT Scheme: As many of you will be aware, from 1 April 2017, a new Flat Rate Scheme percentage of 16.5% will apply to 'Limited Cost Businesses'. These are businesses that spend less than 2% (or a minimum £1,000) of their turnover per annum on 'relevant goods' used for business purposes. HMRC have this week updated Notice 733 to reflect the changes, including further clarification on definition of 'relevant goods' (para 4.6 of the notice).
Inflation: RPI annual inflation in January 2017 was 2.6% (up from 2.5% in December 2016). The government's preferred measure, CPI annual inflation rose to 1.8% (up from 1.6% in December). The main contributors to the increase in the rate were rises in motor fuels and the price of food which were partially offset by downward movements in the prices of clothing and footwear. CPIH, the new measure of consumer price inflation is 2.0% in the year to January 2017 (up from 1.7% in December) – CPIH will become the headline measure of inflation from 21 March 2017. The RPIJ in January was 242.5 (down from 244.0 in December).