2024 has been a busy year for indirect taxes already, with many changes in legislation, policy change, and case law. We are here to make it easier for your organisation to navigate these complex changes, whether in the UK or globally. No matter the VAT or indirect tax challenges you are facing, we have the expertise and knowledge to help.
Our VAT and Customs training programmes will help your organisation proactively manage its tax position. We deliver live and interactive training either virtually or face to face depending on your preference.
Extension to VAT Zero Rate on Women's Sanitary Products
In January 2024, the existing zero rate relief on women's sanitary products was extended to include reusable period underwear. The products must meet certain tests to qualify.
REULA – Finance Act 2024
Starting from 1 January 2024, the Interpretation of VAT and excise legislation has been affected by the Retained EU Law (Revocation and Reform) Act 2023 (REULA). REULA ends the supremacy and special status afforded to retained EU law. It also confirms that UK legislation for VAT and excise can no longer be disapplied on the basis that it is incompatible with retained EU law.
Customs Duty Waiver Scheme
In January 2024 the Government increased the maximum value of duties that can be waived over three tax years for 'at-risk' goods moved into Northern Ireland to €275,000 (~£235,000), up from €200,000 (~£170,000).
First milestone of the Border Target Operating Model
The introduction of health certification on imports of medium risk animal products, plants, plant products and high-risk feed of non-animal from the EU. The removal of pre notification requirements for low-risk and plant products from the EU.
Cross-Border Electronic Services of Payment (CESOP)
CESOP is a new EU regulation that took effect on 1 January 2024 and first returns are due by 30 April 2024. It mandates that Payment Service Providers (PSPs) report payment transactions where the payer is located within the EU and the payee is based in a second country (whether in or out of the EU). Read more in our article here.
Carbon Border Adjustment Mechanism (CBAM) in the EU and UK
For the period from 1 October 2023 to 31 December 2023, businesses importing into the EU must know and record the carbon footprint of their products. Quarterly reporting is required and the first reporting deadline fell due on 31 January 2024. Read our article on the new legislation here.
The Government has announced plans to introduce a UK CBAM from 1 January 2027. This levy will apply in certain circumstances to relevant goods imported in the aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron and steel sectors.
Energy Saving Materials – More technologies and works in scope
The government extended the zero-rated relief (until 2027) for energy-saving materials to battery storage, water-source heat pumps and diverters retrofitted to ESM’s. Also, there will be a relief for specified necessary groundworks in heat pump installations, including by subcontractors.
The government will also re-introduce a relief for energy-saving materials installed in buildings used solely for a relevant charitable purpose. This relief was previously removed at the request of the EU.
Second milestone of the Border Target Operating Model
From 30 April 2024, the second milestone of the Border Target Operating Model was introduced meaning there will be documentary and risk-based identity and physical checks on medium-risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU. Additionally, inspections of high-risk plants/plant products from the EU has moved from destination to Border Control Posts and there is a simplification of imports from non-EU countries, including removal of health certification and routine checks on low-risk animal products, plants, plant products from non-EU countries.
Plastic Packaging Tax
Effective from 1 April 2024, the Plastic Packaging Tax rate has risen from £210.82 to £217.85 per tonne.
VAT Registration Threshold increased
The VAT registration threshold has increased from £85,000 to £90,000, and the deregistration threshold from £83,000 to £88,000.
VAT Treatment of Private Hire Vehicles – Upcoming consultation
The government has announced a consultation in April 2024 into the impact of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC. This ruling requires operators to act as principal in supplying taxi services outside London.
This has the potential to impact the VAT position of operators, many of whom currently apply agency arrangements on behalf of largely non-VAT registered drivers.
End of VAT margin scheme for Cars in Northern Ireland
Motor vehicles sold in Northern Ireland after 30 April 2024 can no longer use the VAT margin scheme and VAT will need to be accounted for on the full selling price of the vehicle after this date. Read our Q&A - Automotive: a taxing environment driven by challenges article.
Customs Declaration Service (CDS) Exports Timeline
The Customs Declaration Service (CDS) was scheduled to replace the Customs Handling of Import and Export Freight (CHIEF) system from 4 June 2024. Officially exporters must now use CDS to file export declarations.
Help with VAT compliance controls - Guidelines for Compliance GfC8
On 18 September 2024, HMRC published the latest Guidelines for Compliance (GFC8) on VAT compliance.
Second milestone of the Windsor Framework
From 30 September 2024, the full “green lane” will take effect for the movement of all goods between Great Britain and Northern Ireland, expanding the benefits of the UK Internal Market Scheme to end unnecessary bureaucracy. This will ensure that goods will no longer move on the basis of international customs requirements, with a new system based on commercial information. New arrangements will also come into effect for the movement of consumer parcels between Great Britain and Northern Ireland, with a new set of data-sharing requirements put in place to ensure that customs declarations are not needed for deliveries to consumers.
Trader Support Service (TSS) Extension
HM Revenue and Customs (HMRC) announced on September 16 2024, that a competitive procurement exercise for the next phase of the Trader Support Service (TSS) will commence by early 2025. This exercise aims to secure a provider for ongoing support to traders from 2026.
Additionally, the current TSS contract has been extended through the end of 2025 to support the continued implementation of the Windsor Framework.
The government has announced an extension by a further 6 months to the six-month freeze on alcohol duty, until 1 February 2025.
VITDA implementation is expected to be delayed until 2025 at least. Read our digital age VAT in the EU – reforms on the way article.
The government has announced that it is freezing fuel duty rates for 2024-25. The temporary 5p cut in fuel duty rates will be extended until March 2025. The government has also announced that, following review, it will maintain the difference between road fuel gas and diesel duty rates until 2032.
Import requirements for goods from the EU and other territories without previous requirements before 1 January 2021 were initially set to begin on 1 July 2022, but the waiver has now been extended until 31 January 2025.
The requirement for Safety and Security declarations for imports into Great Britain from the EU or other territories where the waiver applies, originally set for 31 October 2024 in the initial Target Operating Model, will now take effect from 31 January 2025.
Alongside this, HMRC will introduce a reduced dataset for imports, and the use of the UK Single Trade Window will eliminate duplication where possible across various pre-arrival datasets, such as pre-lodged customs declarations.
In 2025, new arrangements for the supply of medicines into Northern Ireland are due to take effect, ensuring that medicines available in Northern Ireland are those approved by UK authorities, enabling a single licence and a single pack for medicines right across the United Kingdom.
There are expected to be changes in current Gaming Duties with Remote Gaming Duty, General Betting Duty and Pool Betting Duty expected to become a new single tax. Guidance following a Supreme Court case is anticipated.
The government has announced proposed amendments to the VAT Terminal Markets Order (TMO). The TMO is a revenue-neutral tax simplification measure for certain wholesale commodity transactions made by members on named commodity exchanges or market associations, called "Terminal Markets", where certain supplies can be zero rated.
The government plans to update the underpinning TMO legislation to allow for further reform including bringing trades in carbon credits within the scope of the TMO.
The government has announced a consultation into a proposed new levy on vaping products from 1 October 2026. The consultation implies that such a levy will apply at the import or UK manufacturing stage. This is similar to the regime announced for the planned Deposit Return Scheme and there would be processes to ensure credits and drawbacks of duty would apply. The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco at the same time.
HMRC have previously released guidance on the VAT treatment of EV charging and the ability of VAT registered organisations to recover VAT on such costs but have promised further clarification of policy which may be provided in 2024. In the absence of specific guidance, organisations may wish to seek other ways of obtaining comfort on the VAT recovery position for any EVs they have.
Despite much lobbying, the government did not announce the re-introduction of tax-free shopping as part of the March Budget. The government has received analysis by the Office for Budget Responsibility (OBR) and will consider those findings alongside industry representations and broader data. The government says it welcomes further representation on this relief.
HMRC’s appeal in respect of the recent Bolt Services decision on the Tour Operators Margin Scheme (TOMS) has been accepted. We expect to see further litigation on this matter.
This high-profile case focuses on the recoverability of VAT incurred on professional fees connected to a share sale and could have implications for many other organisations who have undertaken similar transactions. The appeal at the Court of Appeal decision has now been delivered and we wait to see if this case will be appealed further. Read our VAT recovery on deal costs – selling shares to fund 'downstream' taxable activity article.
The First Tier Tribunal decision regarding serviced accommodation and the application of the Tour Operators' Margin Scheme is being appealed by HMRC and is expected to be heard in 2024. The appeal could have a significant impact on those in the travel and accommodation sector.
TOMS is a complex area for VAT and often causes a great deal of confusion. We can help to review the applicability of TOMS for those businesses in the travel and tourism sectors. Some businesses may be in a position to submit protective claims considering the recent litigation in this area.
Stephen Kehoe
Matthew Clark
Richard Hogg
Lyndon Firth
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Glyn Woodhouse