United Kingdom Subjects Early Termination Fees to VAT

The United Kingdom tax authority has published a Revenue and Customs Brief with respect to the VAT treatment of early termination fees and compensation payments, stating that fees charged when a customer terminates a contract early will be considered as additional payment for the taxable supply and, therefore, subject to VAT. The new policy will apply from 1 April 2022.

United Kingdom Amends VAT Flat-Rate Scheme for Postponed Accounting on Imports

The United Kingdom tax authority has recently announced changes to the way that businesses use the flat-rate scheme to account for VAT on imports, namely that, from 1 June 2022, it will be necessary for such businesses to account for the import VAT outside the flat-rate scheme calculation.