Key headlines from the Spring Budget 2024. 

If using the VAT Flat Rate Scheme, businesses pay VAT as a fixed percentage of their VAT-inclusive turnover. The actual percentage used depends on the type of business. The scheme has been designed to simplify how a business accounts for VAT and reduce the administration costs of complying with the VAT legislation.

HMRC have announced changes to how penalties are applied for late VAT returns. From 1 January 2023 late payment penalties will apply to any payments of VAT not paid in full by the due date and you will face penatly points if you submit your VAT return late.

Key highlights from the Chancellor's Autumn Statement. 

As part of Making Tax Digital for VAT, VAT registrations have changed. The way businesses register for VAT changed on 1 August 2022. A new VAT Registration Service (VRS) has been created to manage the process.

Online VAT returns will close on 1 November 2022 as part of HMRC’s Making Tax Digital (MTD) movement. This will leave VAT registered businesses to choose either using MTD compatible software or face penalties, unless they are exempt.

Online VAT returns will close on 1 November 2022 as part of HMRC’s Making Tax Digital (MTD) movement. This will leave VAT registered businesses to choose either using MTD compatible software or face penalties, unless they are exempt. 

The 5% reduced rate of VAT is available for a wide range of residential conversion and renovation projects, but it is often overlooked. Applying 5% rather than 20% VAT can dramatically reduce the construction budget.

Empty office spaces are being turned into other buildings, which will often in turn change the property’s class and the VAT that should be applied.

Against a backdrop of rising prices and an OBR inflation prediction of 7.4% this year, the Chancellor’s Spring Statement announced a number of measures aimed at helping households and businesses.
 

As of 1^st April 2022, all VAT – registered businesses will be required to comply with the MTD regime for their VAT accounting.

Whisper it quietly but we may be approaching the end of the major disruption to the economic activity of the past two years. This would be great news for those trades badly affected by previous lockdowns and other restrictions.

This year, Making Tax Digital for VAT is being extended to smaller VAT businesses including the self-employed and landlords.
 

Business gifts are not allowed as a tax deduction against profits. The legislation treats gifts in the same way as business entertaining expenditure, which is also disallowed.

One (potentially large) benefit of Brexit is that from 1st January 2021 residents of England, Scotland and Wales shopping in the EU (or Northern Ireland) are eligible to shop tax-free on certain goods as a private consumer.

If you run a business that sells second-hand vehicles and you have not been charged VAT when purchasing the vehicles, using the Margin Scheme could potentially save you some money.

Expenditure on business entertainment is not allowable as a deduction against profits. Nor may a deduction be made for any expenditure which is incidental to business entertainment. Spending on rewarding staff for good work or to raise morale is classed as employee entertainment which will be eligible for tax relief and you will be able to reclaim VAT on. 

The EU’s e-commerce package will introduce changes from 1 July 2021, relating to the movement of goods from Northern Ireland to the EU as well as imports of low value goods into the EU or Northern Ireland.

If you do not set up a payment plan or pay your liability in full, you may be charged a 5% penalty or interest by HMRC. To avoid this, you can either join the new payment scheme before the deadline of 21 June 2021 or pay off your deferred VAT in full by 30 June 2021. 

Don't delay if you wish to join the VAT Deferral New Payment Scheme to spread the cost of deferred VAT payments for 2020; you have less than a month left to join.

If you wish to arrange paying your deferred VAT over nine instalments, you must set up the plan with HMRC by 19 May 2021.

If you deferred paying your VAT liability for the period between 20 March 2020 and 30 June 2020 and you wish to set up a payment plan, please act now.

Any VAT registered businesses who are not already signed up to MTD, HMRC will gradually migrate onto their new ETMP platform in stages during 2021, in advance of MTD for VAT becoming mandatory from April 2022. 

Small and medium sized businesses that trade with the EU are now able to apply for grants of up to £2,000 to help them adapt to the new post-Brexit customs and tax rules.

A roundup of you options if you deferred VAT payments due between 20 March 2020 and 30 June 2020 and still have payments to make.

A roundup of the key measures announced by the Chancellor in the 2021 Budget. 

Organisations were able to take advantage of the Coronavirus VAT payment deferral scheme in 2020 but with a repayment deadline approaching HMRC have made these options available for those which still need to pay.

Sage has introduced new tax codes to make the process of recording EU and non-EU imports easier, following the announcement of the Brexit agreement.

With the continued changes coming from HMRC to the building and construction industry, there is yet another major change on its way which will affect both customers and suppliers who are CIS and VAT registered. 

HMRC have announced that businesses who deferred VAT payments between between 20 March and 30 June 2020 and still have payments to make can opt in to the new VAT deferral payment scheme when it launches later this year.

What is postponed accounting?

Postponed accounting means that the importer does not pay import VAT when goods arrive at a port or airport instead the VAT is deferred.

With the VAT reverse charge for the construction industry having been twice delayed because of Brexit and Covid, many of you will have learnt and forgotten these new rules twice over already.

As part of the continuing government response to the Coronavirus, Chancellor Rishi Sunak has announced a raft of measures to support the UK economy in a special summer economic update.

 

HM Revenue and Customs (HMRC) has just confirmed that they are allowing an extension to the deadline for implementing full digital links for Making Tax Digital (MTD) for VAT, therefore extending the soft landing period.

Government has announced that HMRC will allow you to defer Value Added Tax (VAT) payments for 3 months. The deferral period will apply from 20 March 2020 until 30 June 2020.

Government has announced that HMRC will allow you to defer Value Added Tax (VAT) payments for 3 months. The deferral period will apply from 20 March 2020 until 30 June 2020.

From 1 October 2019, contractors who employ subcontractors, will need to assume responsibility for declaring and paying the VAT that was previously settled by their VAT registered subcontractors.

HMRC is writing to charities to inform them of the latest changes to VAT relief on social media advertising. 

Making Tax Digital is fast approaching; therefore it is important for mandated businesses with taxable turnover of £85,000+ start preparing for the switch over in April 2019.   The first VAT period affected is the period which begins after 1 April 2019.

Making Tax Digital is fast approaching; therefore it is important for mandated businesses with taxable turnover of £85,000+ start preparing for the switch over in April 2019.   The first VAT period affected is the period which begins after 1 April 2019.

HMRC has confirmed a new policy that VAT will remain due on a deposit, even if the customer does not use the goods or services for which it was paid – this comes into effect from March 1 2019. This change will affect the hospitality industry significantly (but it will also apply to other businesses), which will soon be unable to recover VAT charged on cancelations or ‘no show’ charges.
 

HMRC has confirmed a new policy that VAT will remain due on a deposit, even if the customer does not use the goods or services for which it was paid – this comes into effect from March 1 2019. This change will affect the hospitality industry significantly (but it will also apply to other businesses), which will soon be unable to recover VAT charged on cancelations or ‘no show’ charges.
 

HMRC has confirmed a new policy that VAT will remain due on a deposit, even if the customer does not use the goods or services for which it was paid – this comes into effect from March 1 2019. This change will affect the hospitality industry significantly (but it will also apply to other businesses), which will soon be unable to recover VAT charged on cancelations or ‘no show’ charges.

As we have mentioned before, VAT returns filed for periods commencing on or after 1 April 2019, may need to be filed using the new Making Tax Digital (MTD) protocols. The new filing obligations will apply to VAT registered businesses with turnover above the current VAT registration limit, £85,000.
 

As we have mentioned before, VAT returns filed for periods commencing on or after 1 April 2019, may need to be filed using the new Making Tax Digital (MTD) protocols. The new filing obligations will apply to VAT registered businesses with turnover above the current VAT registration limit, £85,000.
 

A reminder that from 1 April 2019, VAT registered traders with turnover in excess of the current VAT registration limit, £85,000, will need to file returns after 1 April 2019 linked to HMRC’s Making Tax Digital (MTD) systems.

Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted. HMRC’s website offers the following guidance:
 

Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted. HMRC’s website offers the following guidance:
 

In early October, the EU’s Economic and Financial Affairs Council (Ecofin) decided to green-light a proposal for e-books to have the same VAT-free status as their printed counterparts. 

In early October, the EU’s Economic and Financial Affairs Council (Ecofin) decided to green-light a proposal for e-books to have the same VAT-free status as their printed counterparts. 

One of the most commonly asked questions concerning the Making Tax Digital changes coming in from April 2019 concerns whether spreadsheets count as “functional compatible software”.   Bridging software allows businesses to transfer the relevant VAT information from a spreadsheet directly into HMRC's MTD systems - thereby removing the need to purchase a full accounting software package - at least in the short-term. 

With the Government already having pledged to end austerity, the Chancellor had to loosen the purse strings in his Autumn Budget. Fortunately, better than expected growth and borrowing forecasts gave scope for a few extra voter-pleasing announcements.

From April 2019, VAT registered businesses with turnover above the VAT threshold (currently £85,000) will have to:

From April 2019, VAT registered businesses with turnover above the VAT threshold (currently £85,000) will have to:

It would seem, that HMRC is keen to plug the apparent drain from VAT receipts when contractors and sub-contractors charge their customers VAT and then go missing, keeping the VAT for themselves. This is described in legislation as “missing trader fraud”.
 

It would seem, that HMRC is keen to plug the apparent drain from VAT receipts when contractors and sub-contractors charge their customers VAT and then go missing, keeping the VAT for themselves. This is described in legislation as “missing trader fraud”.
 

The consultation on the VAT registration threshold announced by the Chancellor in the Spring Statement is welcome news for small businesses. 

From April 2019, as part of the Government’s Making Tax Digital (MTD) programme, VAT registered businesses with taxable turnover above the VAT registration threshold (currently £85,000) will have to keep their records digitally (for VAT purposes only) and submit their VAT return information to HMRC digitally through ‘MTD functional compatible software’.

If you use standard VAT accounting – pay VAT on sales when invoiced and claim back VAT on purchases when invoiced – you may have availed yourself of the six months claim for bad debt relief on unpaid invoices

If you use standard VAT accounting – pay VAT on sales when invoiced and claim back VAT on purchases when invoiced – you may have availed yourself of the six months claim for bad debt relief on unpaid invoices

A recent VAT Tribunal had to decide whether two hairdressing businesses should be treated as a single business for the purposes of VAT registration.
 

A recent VAT Tribunal had to decide whether two hairdressing businesses should be treated as a single business for the purposes of VAT registration.
 

Small firms will be experiencing a sense of relief this morning, as changes are announced to the controversial and revolutionary new digital tax system.

Small firms will be experiencing a sense of relief this morning, as changes are announced to the controversial and revolutionary new digital tax system.

A recent Treasury announcement confirmed that Making Tax Digital (MTD) will now only apply from April 2019 for businesses with turnover above the VAT threshold.  Full-blown quarterly reporting for all other businesses will now not apply until April 2020 at the earliest.
 

The European Court of Justice (ECJ) has finally crushed hopes that more public bodies and charities engaged in cultural activities could claim VAT exemption on their admission charges. Its recent judgment in the VAT case of the British Film Institute (BFI), released in February, draws a line under an argument that has been running for the last four years.

April 2017 sees changes to the VAT flat rate scheme, which may have a detrimental impact on certain small businesses.

April 2017 sees changes to the VAT flat rate scheme, which may have a detrimental impact on certain small businesses.

The new corporate tax rates are now upon us and the Government is committed to continue to have the lowest corporate tax rate of the G20 major trading nations. As already announced the corporation tax rate reduces to 19% from1 April 2017 and then to 17% from 1 April 2020.

The new corporate tax rates are now upon us and the Government is committed to continue to have the lowest corporate tax rate of the G20 major trading nations. As already announced the corporation tax rate reduces to 19% from1 April 2017 and then to 17% from 1 April 2020.

For some time now, unincorporated businesses have been able to submit simplified accounts in order to settle their tax liabilities. The main advantage of using this system is that income and expenditure is based on money received from customers and money paid to suppliers. In other words, the accruals basis, where income and outgoings are based on the value of invoices sent and received, is not applied.

For some time now, unincorporated businesses have been able to submit simplified accounts in order to settle their tax liabilities. The main advantage of using this system is that income and expenditure is based on money received from customers and money paid to suppliers. In other words, the accruals basis, where income and outgoings are based on the value of invoices sent and received, is not applied.

Changes to the VAT flat rate scheme announced in the Autumn Statement could mean that the scheme is no longer the right option for your business. Tax Advisor Tim Woodgates looks at what the changes mean. 

The length of time you need to keep tax records depends on the types of income you earn and the types of tax you are paying. A list of time limits is set out below:

The length of time you need to keep tax records depends on the types of income you earn and the types of tax you are paying. A list of time limits is set out below:

Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted. HMRC’s website offers the following guidance:
 

Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted. HMRC’s website offers the following guidance:
 

The VAT Flat Rate Scheme is intended to simplify VAT accounting and reporting for small businesses, and some may even find that they pay less VAT than using normal VAT accounting.

The VAT Flat Rate Scheme is intended to simplify VAT accounting and reporting for small businesses, and some may even find that they pay less VAT than using normal VAT accounting.