A summary of how the 2020 budget changes VAT rules:
e-publications
Zero rating will apply to e-publications from 1 December 2020. This brings e-publications in line with traditional printed matter. The zero rate will apply to:
- e-books
- e-newspapers
- e-magazines
- academic e-journals
Presumably, this brings an end to HMRC’s arguments set out in the News Corp case.
Postponed Accounting
From 1 January 2021 postponed accounting will apply to all imports of goods, including those from the EU. This will provide an important boost to those VAT registered UK businesses which are integrated in international supply chains as they adapt to the UK’s position post Brexit.
Sanitary products
From 1 January 2021 the zero rate will apply to women’s sanitary products. This is calculated to save the average women £40 over her life.
Consultation
A consultation paper will be published to gather views on the potential approach to duty and tax-free goods policy post Brexit.
Cross-border goods policy
An informal consultation process will be launched in spring 2020 on the VAT and Excise treatment of goods crossing UK borders after Brexit.
Fund management
As announced on 4 March 2020 the government is legislating to clarify when fund management services are exempt from VAT.
Financial services
An industry working group will be set up to review how financial services are treated for VAT purposes. Presumably how Brexit will affect such services.
“Quick Fixes” Directive
Legislation will be introduced to simplify rules for the VAT treatment of intra-EU movements of call-off stock, allowing businesses to delay accounting for VAT until the goods are called-off.
Partial Exemption
Following the recent call for evidence on the simplification of the VAT rules on Partial Exemption and the Capital Goods Scheme, the government has said it will continue to engage with businesses in relation to their responses and will publish a response in due course.
Commentary
These proposed measures will be broadly be welcomed by business. Especially those in relation to e-publications and Postponed Accounting. It was widely expected that HMRC would lose its argument that e-publications and hard copy publications should be treated differently in any case. Postponed Accounting takes us back to the pre-1990s era. It looks very much like this means a “No-Deal” and although Postponed Accounting may be an easement for some aspects, it remains unnecessary if an agreement with the EU can be reached. However, there appears to be no political will nor appetite to reach such an agreement, so business suffers.