The Value Added Tax (Payments on Account) (Amendment) Order 2011

EXPLANATORY NOTE

(This note is not part of the Order)

This Order increases the thresholds in the Value Added Tax (Payments on Account) Order 1993 (S.I. 1993/2001) (“the Principal Order”) above which a person becomes liable to make payments on account of VAT and below which a person ceases to be liable to make payments on account of VAT.

The changes to the thresholds are in consequence of the change in the standard rate of VAT from 17.5% to 20% with effect from 4th January 2011.

Article 2(b) increases the annual threshold above which a person becomes liable to make payments on account of VAT from £2,000,000 to £2,300,000 with effect from 1st December 2011.

Article 2(c) increases the in-year threshold above which a person becomes liable to make payments on account of VAT from £2,000,000 to £2,300,000 with effect from 1st June 2011.

Article 2(d) increases the in-year threshold below which a person ceases to be liable to make payments on account of VAT from £1,600,000 to £1,800,000 with effect from 1st June 2011.

Articles 2(a) and (e) make consequential amendments to articles 2(1) and 16(1) of the Principal Order.

A full and final Impact Assessment has not been produced for this instrument as a negligible impact on the private or voluntary sectors is foreseen.

A full Impact Assessment of the effect that the increase in the VAT rate will have on the costs of business and the voluntary sector is available at http://www.hmrc.gov.uk/better-regulation/ia.htm.