Indirect Tax
{PDF 371KB}
The Budget provided for a longer than expected transitional period (to 1st April 2009) during which businesses will be able to make final claims for pre 4 December 1996 over stated output tax and pre 1 May 1997 under claimed input tax. Such claims can be made back to 1973 and this transitional period provides certainty for business.
Interestingly HMRC also propose to extend the period during which they can asses for VAT under paid to 4 years and to apply the same extension to claims by tax payers. A transitional period will apply and the new time limits will become fully operative on or after 1 April 2010.The withdrawal of the Staff Hire Concession (“SHC”) in April 2009 will have a significant impact on the exempt sector. The SHC was introduced in 1997 to remove a tax distortion between employment businesses acting as principals (who charge VAT on the full value of supplies of staff) and those acting as agents (who only charge VAT on their commission).
Those impacted will be banks, insurance companies, charities, healthcare providers etc. and will effectively now create a tax distortion between employment and temporary staff (in the former where salaries are not taxed but in the latter where they will be) at a time when the economic outlook is uncertain. One distortion has therefore been replaced by another and you do wonder whether a more targeted approach could have dealt with HMRC’s concerns.© 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
The Budget proposals and other tax changes are summarised on these pages. The proposals may, however, be amended significantly before enactment. The content of this communication is intended to provide a general guide to the subject matter and should not be regarded as a basis for ascertaining liability to tax or determining investment strategy in specific circumstances. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
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