Cash Accounting
The turnover limit is now £1.35m (with the upper ceiling extended to £1.6M). This provides opportunities for planning because any businesses with up to £1.35m turnover can now process their VAT on a cash-received / cash paid basis with the initial use of Cash Accounting usually providing a cash flow injection into the business. Given that the limit has more than doubled, many more businesses can now take advantage of the scheme and it will be worth assessing the impact for clients.

Customs Reverse Charge System
As of 1st June this year this will affect people dealing in mobile phones and computer chips. If the value of the transaction is over £5k and it is made between regulated businesses then the purchaser is responsible for declaring VAT on the transaction.

Scale charges
From the VAT period commencing 01/05/07 charges will be based on C02 emissions rather than engine size.

Weight Watchers – a new view on mixed supply
A recent ruling seems to have brought current views on mixed supply into question (the Card Protection Plan leading case). As Weight Watchers supply both dietary advice and handbooks it has been ruled that they come into the category of mixed supplies which comprise zero-rated handbooks & standard rated classes. Leading VAT commentators, including Tax Counsel, consider the blanket application of CPP is no longer applicable and that each case should be considered on its own merits – the consequence is that all supplies comprising more than one element of different VAT liabilities should be considered to see if savings can be made.

For more detailed information on the above and a mass of other VAT developments simply join The VAT People network to receive your regular Technical Update.

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