Budget 2007
The following sets out the VAT measures announced in the Budget 2007 of relevance to local authorities:
The Budget - 21st March 2007
See also Customs and Excise budget notes.
Overview
Although this was a significant budget for Gordon Brown in terms of radical tax reform, there were very few changes to VAT that will impact on Local Authorities.
VAT Registration and Deregistration limits
From 1st April 2007 the VAT registration and deregistration limits will increase to £64,000 and £62,000 respectively.
Comment: This is only relevant to those authorities that have a trading company, or are responsible for managing the financial affiars of another entity.
Elderly People
The rate of VAT for certain housing alterations for elderly people will be reduced to 5% from 1st July 2007.
Comment: Authorities that make any form of grants to elderly residents for adaptations to their homes should ensure that the reduced rate is applied wherever possible. This is especially important as the VAT incurred is not recoverable by the Authority. Further details of the scope of this provision have yet to be released by HMRC.
Transfer of a Going Concern
From 1st September 2007 new record keeping requirements will apply to TOGC’s so that the seller will be required to retain the accounting records.
Academies
To encourage community use of school’s sports facilities the VAT restriction will be removed to enable academies to make their sports facilities available to the community.
Comment: The details of this provision and how it will work were not defined in the budget speech, so we await further clarification. It does highlight the Government’s commitment to supporting the extended use of school facilities. Further information will be circulated as soon as it is known.
Smoking Cessation Products
For one year from 1 July 2007 the rate of VAT on over the counter smoking cessation products will be reduced to 5%.
See also Budget 2006.
Please Contact Us if you wish to discuss any of the budget issues and how they might affect you.