VAT / 21 posts found
The reduced rate of VAT has gone up – are you ready?
The 5% reduced rate of value-added tax (VAT) has been in place since 8 July 2020. The reduced rate has been extended on numerous occasions to factor in changes to the affected sectors over the course of the pandemic – and has been a lifeline for many affected companies. But, from 1 October 2021, the 5% rate jumped to a new reduced rate of 12.5%, a change that could have significant cashflow implications if you’re one of the affected businesses. Why was the reduced rate of VAT needed? The hospitality, hotel and holiday accommodation sectors have been particularly badly hit by the impact [...]
Brexit may be in limbo, but Making Tax Digital is not
As we have highlighted in many posts to this blog, from 1 April 2019, ALL VAT registered businesses with turnover above the £85,000 VAT registration threshold will have to submit their VAT returns from within software that can link with HMRC’s networks. In techno- speak, your data will need to be transferred using a designated API (HMRC’s application programming interface). The fact that you have always prepared your VAT returns electronically, for example, by using a spreadsheet to record transactions and create the data for your VAT returns, will not be enough. Your spreadsheet will not have the functionality [...]
A possible, unwelcome increase in service charges
From 1 November 2018, owners of properties on estates or sites that are obliged to pay service charges to a management company - for example, for the maintenance of common areas, gardens, or the employment of a site warden or caretaker - may be in for an unwelcome surprise. It would seem that HMRC have applied a concession in the past that allowed the management companies to treat service charges collected on behalf of a landlord as part of an exempt supply for VAT purposes – in other words, when the management company charged a resident, no VAT was [...]
Are you about to buy a second-hand commercial vehicle?
When you buy a new commercial vehicle, you will pay 20% VAT on the purchase price and in most cases this VAT can be reclaimed. This assumes of course, that the motor trader selling you the vehicle is VAT registered. If you purchase a second-hand commercial vehicle there are three VAT options: The second-hand dealer is not registered for VAT and therefore, you will not be charged VAT. The second-hand dealer is registered for VAT and only charges you VAT on the profit he is making on the sale under the VAT margin scheme, in which case you will not [...]
Spreadsheets and VAT from April 2019
Making Tax Digital (MTD) is HMRC’s long running intention to make an electronic link with the accounting data of UK businesses. The idea is to draw in the data they need directly from your computers using links provided by your software developers for this purpose. Which is fine if you are using accounts software that will accommodate these changes. The first implementation deadline for MTD is 1 April 2019, when all businesses registered for VAT, and with turnover in excess of £85,000, will need to submit returns using HMRC’s MTD processes. Certainly, the accounts software that we use to prepare [...]
VAT before and after Brexit
Businesses that buy goods from the EU or export goods to the EU would be advised to read the recent guidance from HMRC that is published under the title: VAT for businesses if there is no Brexit deal The stated purpose of the document is reproduced below. The full text can be read online at https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal/vat-for-businesses-if-theres-no-brexit-deal The purpose of this notice is, in the event that the UK leaves the EU on 29 March 2019 with no agreement, to inform UK businesses of the implications for VAT rules for goods and services traded between the UK and EU member states. [...]
MTD VAT regulations to be available by April 2018
The government has confirmed plans to publish and consult on draft VAT regulations for Making Tax Digital (MTD), with the aim to have the regulations in place by April 2018 to give businesses and software developers at least twelve months to prepare. In July 2017 the Government announced that MTD is being delayed. MTD will be not be mandatory until April 2019, and then only for VAT. From that date, businesses with a turnover above the VAT threshold (currently £85,000) will be required to keep digital records for VAT purposes. The VAT regulations will specify the information a business needs [...]
September 2017 Q&A
Q. I have two small businesses which are treated as a group for VAT purposes, so we only submit a single VAT return covering both entities. Are we eligible to use the Flat Rate Scheme? A. Unfortunately not. If you are part of a VAT group, or are eligible to join an existing VAT group, then you cannot use the Flat Rate Scheme (FRS). There is also a rule which stops 'associated' businesses joining the FRS. A business is 'associated' with another business if: one business is under the dominant influence of another; two businesses are closely bound by financial, economic and [...]
VAT: zero-rating of adapted motor vehicles
Finance Act 2017 introduced legislation designed to end perceived abuse of the VAT relief on substantially and permanently adapted motor vehicles for disabled wheelchair users. The amended rules, which took effect from 1 April 2017, now specify a limit on the number of vehicles within a specified period of time that an individual can purchase under this relief. An eligible individual will be able to purchase one vehicle every three years. There are some instances when this limit can be exceeded, so if an individual's car is written off or stolen or if the vehicle has ceased to be suitable for the [...]
August 2017 Q & A
Q. My wife has a part time job but doesn't earn enough to pay tax. Can she get tax relief on contributions made to a pension scheme? A. Yes, even if you are not earning enough to pay income tax, you still qualify to have tax relief added to any contributions you make to a pension plan. However, the maximum you can pay in is £2,880 a year, or 100% of your earnings, subject to the 'annual allowance' restrictions. Tax relief is added to the contributions at the basic rate of tax (currently 20%), so if you pay in £2,880 net, tax [...]