VALUE ADDED TAX

By way of energy saving measures, the reduced rate of 5% has been extended to include the installation of energy saving materials in all homes not just via grant funded schemes, to the installation of certain security goods when installed at the same time as energy saving materials or central heating systems in qualifying pensioners' homes, and to the fitting of heating systems other than central heating under grant funded schemes. These do not apply to DIY installations only those fitted by builders.

DEREGISTRATION RELIEF

A much-discussed and anticipated increase in the limit below which businesses that deregister from VAT do not have to repay VAT to Customs on stocks and assets has been announced. The current limit of £250 will be increased to £1,000. This will remove the need to repay VAT where stocks and assets of less than £5,714 (excluding VAT) are held.

ELECTRONIC FILING

Small businesses below £600,000 turnover will now be able to file their VAT returns and pay VAT electronically. A £50 discount will be available for one year from April 2001 for such users, increased to £100 if both PAYE and VAT returns are filed and paid in this way.

PENALTIES

Penalties of 17.5% will be imposed on failures to comply with certain requirements of the Investment Gold scheme that was introduced on 1 January 2000, particularly where gold moves between investment and industrial markets.

ANTI - AVOIDANCE

Measures aimed at businesses with no UK establishments and no UK VAT registrations are introduced to compulsorily register these where goods such as capital assets are disposed of and VAT refunds are made under 8th or 13th Directives. Previously disposals of capital assets did not trigger a requirement to register and in particular leasing businesses recovered VAT on buying goods but did not account for VAT on disposal. These measures will not apply if recovery of VAT on purchase is not sought.

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