UK Budget 2020 - VAT

Mar 23, 2020

In an unexpected move, the Government will introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020.

This follows on from the recent Tribunal decision in News Corp UK & Ireland Limited v HMRC [2019]. The Upper Tribunal in that case found that electronic editions of newspapers should be treated in the same way as printed newspapers for VAT, and zero-rated.

There were also several other measures announced for VAT:-

  • the Government has confirmed that the current VAT threshold of £85,000 will remain unchanged for 2021-22;
  • Following informal consultation in 2019, the Government will introduce new entry and exit rules for the Agricultural Flat Rate Scheme;
  • From 1 January 2021, legislation will implement a zero rate of VAT on women’s sanitary products;
  • A consultation to gather views on the potential approach to duty- and tax-free goods policy after the end of the EU transition period is currently open and will run to 20 May 2020;
  • Legislation will be introduced to clarify when fund management services are exempt from VAT;
  • An industry working group will be set up to review how financial services are treated for VAT purposes;
  • The Government will introduce legislation to introduce simplified rules for the VAT treatment of intra-EU movements of call-off stock, allowing businesses to delay accounting for the relevant VAT until the goods are called-off. Call-off stock is the description given to the transfer of goods (by a VAT registered business) from one EU member state to another to create a stock of goods from which their customer can 'call-off' (i.e. use and pay for) the goods as and when they require them; and
  • Following the recent call for evidence on the simplification of the VAT rules on Partial Exemption and the Capital Goods Scheme, the Government will continue to engage with stakeholders in relation to their responses and will publish a response in due course.
  • As announced in September 2019, the implementation of the VAT domestic reverse charge for building and construction services will go ahead as planned from its delayed commencement date of 1 October 2020.