While the changes made to VAT have a limited impact, some of them relate to the problems caused by Brexit.
To ensure that motor dealerships in Northern Ireland have a level playing field with the rest of the UK, there were two announcements on second-hand cars.
If the EU agrees, the Government will provide interim rules for the continued use of the second-hand margin scheme on the sale of second-hand vehicles (previously registered in the UK before 1st of January 2021).
The rules would apply retrospectively from 1st of January 2021.
If no agreement is reached with the EU, VAT will apply on the full selling price of vehicles bought from Great Britain.
To replace the proposed interim arrangements above, the Government intends to introduce a new scheme.
Businesses that buy second-hand vehicles from Great Britain to sell in Northern Ireland or the EU will be able to recover an amount equivalent to the VAT that could be included in the vehicle’s purchase price.
This should mean that Northern Irish dealers account for a comparable amount of VAT to the amount dealers in Great Britain (who can still use the second-hand margin scheme) would account for on a similar sale.
The most significant change to free zones is a new VAT charge for goods exiting the free zone and entering into free circulation within the UK.
The exit charge will not apply if a subsequent zero-rated supply is made within the free zone, or if a taxable supply is made within three months of entering free circulation. VAT also becomes due if free zone customs procedure rules are breached.
The legislation will differentiate the free zones from other warehousing regimes, and amend some of the existing legislation so that it is compatible with the VAT rules.
Currently, dental prostheses supplied by registered dentists, dental technicians, or other care professionals are VAT exempt. This will be extended to include the importation of prostheses, too, and will apply to imports to all of the UK, including Northern Ireland.
An upcoming consultation will look at simplifying the VAT treatment of fund management fees.
The Budget documentation reminds taxpayers of the new points-based penalty system as of 1 April 2022, as announced in the Spring Budget 2021.
Earlier this year, the Chancellor announced plans to maintain the VAT-registration thresholds for two years from 1 April 2022. This means the VAT-registration and deregistration thresholds should remain unchanged until 31 March 2024.
If you would like a more in-depth summary of the 2021 Autumn Budget, you can read our exhaustive overview here.
On the other hand, if you would like more information on a the budget and its various aspects, you can refer to our main blog page, where you will find a summary post on the 2021 Budget, as well as posts covering business tax, personal tax, and duties/other announcements.
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