Business Brief 07/06.

(From Government News Network (Was Hermes-Government Press Releases))

] HM REVENUE AND CUSTOMS BB 07/06 27 June 2006 Business Brief 07/06

Contents: 1. VAT: New reduced rates for supplies of contraceptive products and welfare advice and information

2. VAT - End of litigation in IDT Card Services Ireland Limited (IDT)

3. VAT - Exemption for the Management of Authorised Collective Investment Schemes

1. VAT: NEW REDUCED RATES FOR SUPPLIES OF CONTRACEPTIVE PRODUCTS AND WELFARE ADVICE AND INFORMATION

At Budget 2006, in support of its sexual health strategy, the Government announced that, subject to Parliamentary approval, a reduced VAT rate of 5% for supplies of all contraceptive products would be introduced from 1 July 2006. The Statutory Instrument to introduce the reduced rate has now been laid before Parliament and is due to come into effect on that date. In addition, the Statutory Instrument will also introduce a reduced rate for supplies of welfare advice and information as announced as part of Budget 2006.

Contraceptive products Businesses making supplies of contraceptive products should therefore ensure they are prepared for this VAT reduction on supplies made from 1 July 2006.

Contraceptives obtained on the prescription of a medical practitioner are VAT zero-rated, whilst contraceptives that are fitted, injected or implanted by a health professional form part of a VAT exempt supply of medical care. The new reduced rate will not affect the liability of those supplies.

For more detailed guidance on the application of the reduced rate, please see Budget Note 40, which is available on our website (www.hmrc.gov.uk). Welfare advice and information The reduced rate applies to supplies of welfare advice and information made by charities and other state regulated welfare providers. All other such supplies remain subject to VAT at the standard rate of 17.5%.

For guidance on the application of the reduced rate for welfare advice or information charities should contact HM Revenue & Customs' Charities Helpline on 0845 3020203. State regulated commercial welfare providers should contact HM Revenue & Customs' National Advice Service on 0845 010 9000.

2. VAT - END OF LITIGATION IN …