Spring Budget 2023: VAT and Customs Duty

                                               Robert Marchant, Partner, VAT and Customs Duty
From a VAT, Customs and other indirect tax perspective, the Spring Budget on 15 March didn’t offer much in the way of change. The headlines were linked to the start of new consultations or updates on existing ones to maybe see some change in the future. Other than that, it was tinkering around the edges so for the most part it will mean business carries on as normal.

To discuss what this means for you and your business get in touch or speak to your usual Crowe contact.

Our tax team looks at the measures announced in the Spring Budget 2023.

Minimal VAT changes announced

Recent Budgets have rarely contained any significant VAT changes, and this trend continues in the Spring Budget we saw today.

What has changed?
  • VAT exemption is being extended to services directly supervised by pharmacists and zero rating will apply to prescriptions for medicines supplied through Patient Group Directions.
  • HMRC will simplify the VAT treatment of deposits charged under the proposed Drink Deposit Returns Scheme so the correct amount of VAT is accounted for and VAT accounting rules simplified.
  • Late payment interest will be charged from the date that HMRC made the original payment where they have overpaid a taxpayer. Currently, the interest is charged 30 days after the date of the assessment but in future this will be from the date the payment was made. This follows on from HMRC’s recent announcement that interest is due on VAT errors even if there has been no loss to HMRC as the VAT chargeable was fully recoverable by the recipient. 
  • DIY housebuilders refund scheme will be digitised and deadline extended to six months.

There are a number of areas where HMRC will be carrying out further reviews and consultations.

  • In the finance sector, HMRC’s response to its consultation on fund management reform will be published soon. Their work with industry stakeholders on its review of the VAT treatment of financial services will continue. 
  • HMRC wants ideas on reforming VAT relief for energy saving materials, including additional technologies and extending relief to relevant charitable buildings

The changes to how HMRC applies interest to errors will have the biggest impact on most businesses.

Back to top: Explore all Spring Budget measures announced

Customs and excise changes announced

What has changed?
  • Fuel duty frozen – 5p per litre reduction continued.
  • Draught beer duty frozen – will not increase in August unlike other alcohol duties.
  • Six day extension for submission of supplementary import declarations for users of Simplified Clearance Declaration procedures.
  • Voluntary standards to be introduced for customs intermediaries.

It is disappointing that the Chancellor has done nothing with rates of customs duty, especially for food importers. Extending the 5p per litre reduction in fuel duty will serve only to reduce the tax bill for oil companies, and as we have seen before, is unlikely to be passed on to the driver.

Drinkers will not notice any saving on the price of a pint at the pub, as the forecast 11p a pint saving is not a reduction in current prices but is an inflationary increase which will not happen.

The six day extension for submission of import supplementary declarations is a sticking plaster solution for a system which has become overloaded and inefficient, so while the extension may be welcome to users of this system, the root causes of system inefficiencies are not being addressed. Voluntary standards for customs intermediaries seem pointless unless they are to become mandatory.

Further detail 

HMRC’s customs package sets out the measures, many of which are already under consultation or will be in due course.

Back to top: Explore all Spring Budget measures announced

Contact us

Robert Marchant
Robert Marchant
Partner, National Head of Tax