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According to the government's figures, ‘correcting VAT anomalies' and ‘closing VAT loopholes' by the measures the chancellor has introduced in the 2012 Budget is expected to raise £595m and £755m respectively over the next five years - a total of £1.35bn over the period.
But questions have been raised at these figures. We asked our resident VAT Guru, Tonmoy Kumar, what he thinks.
The Budget has targeted VAT on various products from warmed-up sandwiches to large caravans. These aren't "loopholes being closed", these measures concern cases that HMRC has lost in the past, so the government is changing the law.
The Government has produced the figures from a range of sources, according to the Budget 2012 Policy Costings Document.
According to the HMRC consultation document, the changes to takeaway food and catering premises is expected to bring in around £50m during 2012/13, rising to £120m in 2016/17.
All in all, the figures appear to be extremely generous.
The government has also withdrawn the VAT tax break for alterations to listed buildings, recognising the inequality in the fact that altering a listed building was not liable for VAT, yet repairing it to maintain its heritage features attracted VAT. This measure is expected to raise £35m next year, rising to £125m in 2016-17.
A lot of DIY.
Figures for hot take-away food has been taken from the Department for the Environment, Food and Rural Affairs, the Office for National Statistics and commercial reports, alterations to listed buildings data was taken from the Department for Communities and Local Government and local authority planning applications. (The tax base affected estimated at about £700m and about £600m respectively.)
Data for self-storage facilities and sports drinks was taken from commercial reports, (£200m and £70m respectively), hairdressers' chair rentals from HMRC and trade association reports (about £70m.) and data for caravans from commercial and trade association reports (about £300m.)
As for the proof on whether these numbers come in, and whether complexity has really been removed, only time will tell.
If you need any help and advice for your business on VAT or any other implications of the 2012 Budget, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help
ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900 E-mail: email@example.com
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