In the upcoming years, taxpayers will not be issued with automatic penalties for the late filing of tax returns or the payment of tax. Instead, HMRC will issue "points" for missed deadlines, before a financial penalty is levied. It is intended that this new system will be fairer and only penalise those who persistently fail to meet their compliance obligations. The changes will apply to VAT customers for accounting periods beginning on or after 1 April 2022, and to those who submit self-assessment tax returns with business or property income exceeding £10,000 p/a for accounting periods beginning on or after 6 April 2023, and to all other self-assessment taxpayers from 6 April 2024. Current Rules (Self-Assessment) Under the current...

As part of the government’s coronavirus measures, businesses were given the option to defer their VAT payments between 20 March 2020 and 30 June 2020 under the VAT Payment Deferral Scheme. Initially, they were given until 31 March 2021 to pay any VAT liability accumulated in that period. However, it was later announced as part of the government’s Winter Economy Plan that these businesses would be able to opt to pay their VAT liability in up to 11 equal instalments over 2021-22 (interest free) using the VAT Deferral New Payment Scheme. Your Options In effect, if you deferred your VAT liability as part of the VAT Payment Deferral Scheme, you currently have three options for paying this: Pay the full amount of deferred VAT o...

Following yesterday’s cancellation of the proposed autumn budget, the Chancellor of the Exchequer Rishi Sunak spoke in Parliament today (24.09.20) to address the next phase of the Government’s economic support during this crisis, dubbed their ‘Winter Economy Plan.’ The chancellor began his speech on a positive note, stressing that the UK is in a better economic position than in March, however he emphasised the need for more financial provisions to accompany the realisation that the virus will remain prevalent for months to come. The measures outlined today can be summarised as follows: 1. Jobs Support Scheme (JSS) The JSS will replace the furlough scheme (officially known as the Coronavirus Job Retention Scheme) ...

Making Tax Digital (MTD) represents a series of efforts by the government to make it easier for individuals and businesses to keep on top of their tax affairs and get their tax right. The rules will mean that individuals and businesses will need to keep digital records, and send regular updates to HMRC. Certain announced changes have been postponed by the government in the past. This article provides an update of the latest position for businesses and individuals. VAT Since 1 April 2019 (1 October 2019 for some more complex businesses), MTD for VAT has required that businesses with turnover over the VAT threshold (£85,000 in 2020/21) keep their records in a digital format, and submit their VAT returns using software. In practice t...

If you build yourself a new home or if you convert a non-residential building into a home for you or your relative to live in as a main residence, you may be able to claim a VAT refund on building materials and services. In order to be eligible for a refund, you must make a claim with HM Revenue & Customs (HMRC) no later than 3 months after the "completion" of the building. P Wedgbury & S Wedgbury v HMRC - The Definition of "Completion" The term "completion" is unfortunately not clearly defined in the legislation. However, in the recent case of P Wedgbury & S Wedgbury v HMRC (2020) the First-Tier Tribunal (FTT) considered the meaning of "completion" and therefore provides a useful guide for taxpayers who are looking to...

On the 8th July 2020, Rishi Sunak (the Chancellor of the Exchequer) set out the next round of financial provisions aimed at counteracting the contraction of the economy due to the impact of coronavirus. The headline policies from the fiscal event, dubbed a 'mini-budget,' are as follows: 1.Furlough Funding Eased - The furlough scheme will gradually wind down before concluding at the end of October. Currently, the Government pays 80% of wages up to £2,500 plus associated National Insurance contributions (NICs) and pension contributions leading to a maximum grant of £2,804 per employee. However, there are several changes proposed in the coming months to ease this finance: August - Employers will now need to pay employers NICs a...

Individuals and businesses with land/buildings may benefit from opting to tax the property for VAT. Furthermore, there may be tax implications to consider when acquiring or selling land/buildings that are already opted to tax. Why Opt to Tax Property? Typically, property that is rented will be exempt from VAT (subject to certain exceptions). To this end, the the owner/business will not charge VAT on rent and will not be able to reclaim VAT on costs. Where the expenses of letting the property are significant, then the VAT on the expenses may represent a material cost. However, owners of commercial (non-residential) property have the option to tax the property, meaning: Output VAT will be chargeable on supplies i.e. rent Inpu...

Domestic Reverse Charge Implementation Delayed In a move described as a ‘victory for common sense’ by the Federation of Master Builders (FMB) chief executive, the implementation of the domestic reverse charge which was due to take effect on the 1st October 2019 will now come into effect on the 1st October 2020. The domestic reverse charge means that customers receiving a service in the constructing and building sector may have to pay the VAT to HMRC instead of paying the supplier. Some 150,000 businesses will be affected by the change. Reasons for the delay HMRC announced the delay on the 6th September 2019 citing concerns from industry representatives and the desire to avoid the changes coinciding with Brexit as the reasons...

From 1 October 2019, a new domestic reverse charge system for VAT will come into effect. This blog will explain how the new system will work and who it will apply to. The Current System Under the current rules, a supplier of construction services is liable for the VAT on the supply of goods and services. In practice, this means that the supplier charges VAT when they bill their customer. Their customer then pays their bill and the VAT to the supplier, who then forwards the VAT payment to HM Revenue & Customs ("HMRC"). However, there have been increased instances of criminal activity in relation to this, whereby the supplier has gone missing, along with the charged VAT before it is paid to HMRC. Therefore, new preventative ru...

If your business imports and/or exports goods with the EU, you may be struggling with the uncertainty around the UK's withdrawal from the EU. In December 2018, HMRC published a letter for businesses that trade with the EU and steps that should be taken to prepare for no deal. This blog will help you to understand these steps and the actions that you should take. Firstly, in the event of no deal, you will be responsible for making customs declarations for your UK-EU trade. In order to ensure that you are ready for this, you should: Register for a UK Economic Operator Registration and Identification (EORI) number. You can do this at gov.uk/hmrc/get-eori. Register with HMRC’s new Transitional Simplified Procedures (TSP) for cus...