2021 Autumn Budget: Indirect Tax
October 27, 2021
With the exception to the announced consultation on Alcohol Duty reform and the proposed 1 April 2023 changes to Air Passenger Duty, indirect taxes received a light touch in the Autumn Budget 2021. We suspect many businesses in the hospitality and leisure industry will be disappointed that it appears the reduction in the VAT rate, that applies to many goods and services in this sector, will not be extended past 31 March 2022.
The other measures announced include:
- Brexit related changes concerning Northern Ireland and second-hand vehicles;
- Some changes to VAT in relation to free zones, including a VAT exit charge when goods are removed from a free zone in certain instances to prevent unintended tax advantages; and
- Some adjustments to the tax framework for the Plastic Packaging Tax which will be introduced from 1 April 2022.
Of the indirect tax measures, the one with the most wide-ranging interest is likely to be the Plastic Packaging Tax (“PPT”) which affects not only manufacturers of plastic packaging, but also those businesses importing relevant plastic packaging and even packaging that already contains goods, e.g. plastic bottles filled with drinks. With the implementation date of 1 April 2022, businesses will need to understand quickly whether this tax will apply to them and whether a registration for the tax is necessary. In October 2021, HMRC published further information on the PPT which clarified a number of issues that were unclear from the earlier guidance. However, it remains a complex process to establish whether an imported product falls within the tax or is outside the scope or exempt.
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October 27, 2021
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