May 2023 VATwatch

HMRC have extended the VAT exemption for healthcare, it now includes medical service carried out by staff directly supervised by registered pharmacists in the UK.

This will encourage pharmacists to increase the scope of their clinical services to the public, align the VAT treatment of these services with other registered health professionals and will ensure that VAT legislation is in line with how the NHS currently operates.

From 1^st August this year, changes will be made to VAT provisions on the Drink Deposit Returns Scheme (DRS). Previously there have been no regulations covering VAT accounting for the DRS.

A small deposit is added to the sale of bottled and canned drinks at each stage of the sales process (manufacturers/importers, wholesalers and retailers). Currently there is no way to account for VAT on cans/bottles returned via the scheme at each stage.

In essence, the obligation to account for VAT on bottles/cans that are not returned via the scheme will lie with the manufacturer/importer of the drinks. The manufacturer/importers receive the deposit amount on each sale, and it is their responsibility to return the deposit to consumers who use the scheme.

To incentivise the installation of Energy Saving Materials (ESMs) across the entire UK, the time-limited zero rate of VAT for the installation of certain types of ESMs has been extended to Northern Ireland from 1st May.

This brings Northern Ireland in to line with the rest of the UK. This change has been made under the Windsor Framework, which we detailed in last month’s newsletter.

The zero-rating will apply until 31 March 2027, when the current plan is that the reduced rate of 5% will be re-introduced.

The measure also widens the scope of the relief to include wind and water turbines and simplifies the legislation by removing certain eligibility criteria.

HMRC has sent emails to businesses and agents concerning the need for all VAT registered businesses to submit returns using Making Tax Digital for VAT.

From 15 May all VAT registered businesses must use Making Tax Digital (MTD) and will no longer be able to log in to the existing VAT online accounts to submit VAT returns. Businesses must make sure that they’re now using MTD compatible software.

The emails cover:

·      The steps to take if you haven’t already started using compatible software.

·      How to check eligibility and apply for an exemption.

·      Penalties that businesses could incur.

Thank you for taking the time to read this VATwatch round-up.