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In addition to confirming measures to prevent automatic penalties being imposed on small businesses with a turnover below £150,000 for failure to submit returns or payments due on time, further incentive measures are being introduced. These relate to businesses that trade above the VAT registration limits but fail to register. An amnesty is being declared between 10 April and 30 September 2003 to allow those to register and avoid the imposition of belated notification penalties of between 5% and 15% of the tax due.
Measures reported in Budget 2002 to reintroduce deferred accounting for compliant importers have been confirmed for implementation from 1 December 2003. For those not eligible, they will be able to reduce the level of their guarantee under the Duty Deferment Guarantee Scheme from the full amount of VAT and duty due each month to zero in some cases.
Measures already published to attempt to bring non-EU based businesses providing electronically supplied services to individuals or non-business organisations based in the EU into VAT registration within the EU from 1 July 2003, have been extended in the UK. Such businesses can choose which Member State they wish to register in and then account for VAT in that state for all their EU supplies.
Several new measures are being introduced, amongst which are extensions of powers to demand security from a business believed to be involved in false use of VAT registration numbers, missing traders, or deliberate or persistent insolvency. Additionally, for those involved in chain transactions of goods or services, where VAT is evaded by a member or members of the chain, frequently referred to as Carousel fraud, members of the chain may be held jointly and severally liable for unpaid VAT. Both measures come in from 10 April 2003. From 16 April 2003 Customs will require higher standards of evidence for input tax deduction in respect of certain categories of goods such as alcohol, road fuel, telephones and computers.
Further measures include the imposition of tax points in respect of continuous supplies of services between connected parties from 1 August 2003, a requirement from 9 April 2003 to carry out apportionment at source of input tax where land and buildings are used both for business and non-business purposes, and additional measures regarding the sale of new freehold commercial buildings.