Key HMRC updates to VAT

From green incentives to administrative reform, HMRC has been busy rolling out updates that could affect a wide range of businesses. Recent announcements include new VAT treatment for electric vehicle charging points in new builds and conversions, a long-term “transformation” plan aimed at modernising systems and compliance, and a potential expansion of VAT relief to make charitable donations more tax-efficient. Here’s a summary of the latest changes and proposals:

Electric Vehicle charging points

HMRC have confirmed that EV charging points installed by new house builders are zero-rated as “builders materials” when a new dwelling is constructed. If the developer is converting a commercial building to residential use, the EV charging points VAT has a reduced rate at 5%, as per the rest of the conversion.

HMRC administrative updates in a “transformation” plan

HMRC published a plan in response to the 20th anniversary of their creation, the merger of HM Customs & Excise and the Inland Revenue. Not surprisingly, it includes a promise to improve customer service, upgrade their IT and increase the use of AI, with 5,500 additional compliance staff in the next 5 years. Some specific plans for VAT and Customs include:

• A reward scheme for informants of tax avoidance
• An extension to the requirement to notify HMRC of the use of avoidance schemes, DOTAS
• Increased interest rates on tax debts
• Improved or simplified Temporary Import (TI) reliefs for imported goods

HMRC hold consultation on new VAT relief for donating goods to charity

The consultation ended recently in July, but it provides hope that HMRC will introduce a new VAT relief that allows businesses to donate goods or services to charities without suffering restrictions on their own VAT recovery. The existing relief applies only to goods donated to charities for resale (typically via their High Street shops), but does not apply when the charity uses the donated goods or services internally, without onward sale.

If you wish to discuss any of these VAT updates in further detail, please get in touch with one of our Indirect Tax Services experts, here.