Spring Budget 2023 – VAT and Customs Measures
The Chancellor of the Exchequer, Jeremy Hunt, presented the Spring Budget to the House of Commons on 15 March 2023.
The main points of interest from a VAT and Customs perspective are set out below.
Measures announced at Spring Budget 2023 and in Spring Finance Bill 2023
- Technical changes to late payment penalties, late payment interest and repayment interest rules for VAT
These measures make technical changes to late payment interest, late payment penalties, and repayment interest rules for VAT. The changes align with Penalty Reform and Interest Harmonisation legislation for VAT-registered businesses, to ensure that the rules operate as intended.
- The changes to repayment interest take effect from the date of Royal Assent to the Spring Finance Bill 2023.
- The changes to late payment interest take effect from 15 March 2023.
- The changes to late payment penalties take effect from 1 January 2023.For further information see the Policy Paper Interest harmonisation and penalties for late submission and late payment of tax.
- VAT Provisions for Drink Deposit Return Schemes
This measure introduces new VAT accounting rules for businesses making DRS supplies.A DRS requires a deposit to be charged at each stage of the supply chain. The deposit would be added to the price of the goods by the person (such as a manufacturer or importer) who first sells a DRS drink in the United Kingdom and on any subsequent sales e.g., by wholesalers or retailers. Once the drink has been consumed, if the container is returned, the deposit will be refunded.This measure makes new statutory provision for VAT accounting for such cases.
For further information see the Policy Paper VAT Provisions for Drink Deposit Return Schemes.
- Reviews and Appeals Against Discretionary Customs GuaranteesThis measure will enable traders to request a review of, or appeal against, a decision by HMRC to require a financial guarantee as a condition of releasing imported goods from customs control in circumstances where the amount of duty due is not clear at the point when a customs declaration is accepted by HMRC. The legislation will also bring provisions relating to these guarantees within the framework of legislation covering other forms of customs guarantee.The measure aims to ensure the appropriate rights of review and appeal are available to traders and apply a consistent set of general rules for all types of import duty guarantee.
This measure will take effect from Royal Assent of Spring Finance Bill 2023.
For further information see the Policy Paper Customs – reviews and appeals against discretionary guarantees.
- Introduction of Customs Advance Valuation RulingsThe measure will enable HMRC to introduce Advance Valuation Rulings (AVRs) to customers importing goods into the UK.AVRs are written decisions made by customs authorities at the request of a trader that are legally binding on both parties. They are a trade facilitation and are not mandatory. They will provide certainty to customers on how to arrive at the customs value for their goods. The customs value impacts the amount of duty that may be due. The aim of AVRs is to assist customers in the completion of customs declarations.
The measure will have effect on and after the date of Royal Assent to the Spring Finance Bill 2023.
For further information see the Policy Paper Introduction of Customs Advance Valuation Rulings
Measures announced at Spring Budget 2023 but not in Spring Finance Bill 2023
- Services directly supervised by pharmacistsThe Government will legislate by Statutory Instrument to extend the VAT exemption for healthcare to include services carried out by staff directly supervised by registered pharmacists in the UK.The changes will take effect from 1 May 2023.
For further information see the Policy Paper VAT: Medical services directly supervised by pharmacists in the UK.
- Extending the zero rate of VAT for medicines dispensed on prescriptionThe Government will extend the zero-rate of VAT on prescriptions for medicines supplied through Patient Group Directions.Patient Group Directions provide a legal framework that allows some registered health professionals to supply and/or administer specified medicines to a pre-defined group of patients, without them having to see a prescriber (such as a doctor or nurse prescriber).
This measure will be introduced in autumn 2023.
- Fund management reviewFollowing the consultation on proposed reform of the VAT rules on fund management to improve legal clarity and certainty, which closed in February, the Government is considering the responses and continuing to discuss the proposals with interested stakeholders.The Government will publish its response to the consultation in the coming months.
- Review of VAT treatment of financial servicesBuilding on the recommendations of the industry working group established to consider the future of VAT and financial services, the Government will continue working with industry stakeholders to consider possible reforms to simplify the VAT treatment of financial services, reducing perceived inconsistencies and providing businesses with greater clarity and certainty.
- VAT: DIY Housebuilders Scheme Digitisation ProjectThe Government will legislate to digitise the VAT DIY housebuilders’ scheme and will also extend the time limit for making claims from 3 to 6 months. These measures aim to improve the overall customer experience, reducing the administrative burden for both claimants and HMRC.
- Spring Budget 2023 customs measuresThe Government has announced a package of measures intended to simplify customs import and export processes for traders, taking advantage of new freedoms following EU exit whilst at the same time upholding the UK’s high regulatory and security standards at the border.This publication aims to provide more detail for stakeholders on some of the measures in the customs package. These measures reflect views from traders and the border industry, gathered through last year’s Call for Evidence: An Independent Customs Regime, and go further in proposing new areas for reform within the customs system.
The measures are detailed below and the Government plans to engage with stakeholders on each of these measures in the coming months:
- Simplifying customs declarations requirements review
- Simplified Customs Declaration Process improvements
- Consultation announcement: Introducing voluntary standards for customs intermediaries
- Transit policy simplifications
- Modernising Authorisations
- Changes to Customs Guarantees for Special Procedures, Temporary Storage and Duty Deferment