A third of all energy generated in the UK last year was from renewable sources, according to climate research and news site Carbon Brief. Drawn from UK government data, the analysis found electricity generated from fossil fuels fell to a record low. The UK has cut its carbon emissions by more than 43% since 1990, but is still not […]
A staff party or an annual function qualifies as a tax-free benefit for your employees providing that you meet the following conditions: The total cost must not exceed £150 per head, per year. £150 includes VAT together with any extra costs such as transport and accommodation. The £150 is a limit and not an allowance: if the cost is £151, the whole […]
Good record keeping is vital, not just to ensure timely and accurate filing of tax returns but also in the event of any challenge by HMRC. Penalties can also be levied if your records are incomplete or inaccurate. Generally, you need to keep sufficient records to support any income or expenses included in a tax […]
An employer can provide sporting or recreational benefits tax-free to: Its employees. Any member of their family and household. Main conditions: Benefit to be available to all staff. Benefit not generally available to the public. Benefit cannot include vehicles, holidays or take place in domestic premises. Unfortunately the exemption excludes membership to public gyms and sports […]
The Professional Publishers Association (PPA) has welcomed an EU decision to reduce VAT on online publications, including electronic books, newspapers and periodicals. At present, electronically supplied services such as digital publications are taxed at the standard VAT rate, which in the UK is 20%. This contrasts with traditional media, which is zero-rated. The directive, which […]
VAT Returns and EC Sales List: commercial software suppliers is published by HMRC to assist businesses find recognised suppliers and software for filing VAT Returns online. The main VAT return can also be submitted using the HMRC free online product: Online tax return – Value Added Tax. HMRC has tested all the features of that […]
European Commission analysis shows EU countries lost almost €150bn (£134bn) in VAT revenues in 2016, with the UK and Ireland among six member states reporting an increase in the ‘VAT gap’ between expected revenue and the amount actually collected. Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs said: ‘Member states have been […]
HMRC has written to 145,000 VAT-registered businesses across the UK, including Northern Ireland, which only trade with the EU, explaining changes to customs, excise and VAT in the event of a ‘no deal’ Brexit, which would require them to complete customs declarations for the first time. While HMRC stresses that it is ‘unlikely’ the UK […]
Under Making Tax Digital (MTD) for VAT, most VAT registered businesses will have to report VAT in new way. If your turnover is above the registration threshold in the year to 31 March 2019 then from 1 April 2019 you must: Keep your bookkeeping records for VAT digitally Stop using HMRC’s portal to submit your […]
Certain traders can be made liable for the unpaid VAT of another VAT-registered business when you buy or sell specified goods. HMRC have recently updated VAT notice 726 which advises traders to carry out due diligence into their supply chain. The specified goods are any equipment made or adapted for use as a telephone and […]
The Government has set out the VAT implications for businesses in the event of a “no-deal” Brexit. For most UK businesses there will be no change to the VAT rules.There will, however, need to be some specific changes to VAT rules and procedures applying to transactions between the UK and EU member states. The key […]
From April 2019, any VAT registered business with taxable turnover above the registration threshold will be required to submit digital VAT records and make digital returns as part of HMRC’s Making Tax Digital format. Voluntary VAT registered businesses with turnover below the VAT registration threshold will not be required to take this new approach until […]
The growth in online e-commerce is an important part of the UK economy but has also created opportunities for abuse of the VAT system. HMRC have asked for the assistance of online market place companies to help them identify online trader who may not be complying with the requirement to register for VAT. Ebay and […]
If related businesses are trading in parallel there is the possibility that HMRC could argue the turnover of each business should contribute to the same VAT registration threshold (£85,000 until at least April 2020) rather than each business separately. This is known as “business aggregation for VAT purposes”. Put simply rules prevent businesses artificially staying […]
When a business changes entity, e.g. from a sole trader or partnership into a limited company, to what extent does the VAT status of the original entity affect the new one? The important point is whether the original entity was a taxable entity, this means that they were either already VAT registered or liable to […]
Making Tax Digital (MTD) for VAT is scheduled to start in April 2019 which means that your VAT information needs to be submitted to HMRC digitally. On 18 December 2017, HMRC published draft legislation together with examples of how the business account records might link with the HMRC computer in order to comply with MTD […]
The £85,000 VAT threshold will remain at the same level for two years pending further consultation. The Office of Tax Simplification has pointed out that this high limit (one of the highest in Europe) distorts competition and is a disincentive to business.
The general rule is that if the entertainment is provided only for directors (or partners) of a business the VAT incurred is not input tax. This is because the goods or services are not deemed used for a business purpose. The VAT therefore cannot be reclaimed on the VAT return. However, where directors and partners […]
If your business has suffered VAT on expenses incurred in another EU country, for example overseas hotel and restaurant bills, then it is possible to reclaim the foreign VAT. The foreign VAT must not however be reclaimed on the UK VAT return but by using HMRC ‘s VAT online services system. You must claim by […]
Making Tax Digital will be mandatory for VAT purposes from April 2019. From then, businesses with a turnover above the VAT threshold (currently £85,000) will have to: Keep their records digitally – for VAT purposes only Provide their VAT return information to HMRC through MTD-compatible software. Other businesses will be able to adopt […]
The queues when trying to contact HMRC by phone are often very long so this can be a frustrating and time consuming process. Most departments now offer a WebChat service where you can communicate with an advisor online. This method also has the advantage of being able to save your conversation so that you have […]
A business is either registered for VAT or not registered for VAT. A business cannot have some activities registered and some not. Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold. However it can be possible for two people […]
Currently in the UK most physical books are sold with 0% VAT and most e-books are sold with 20% VAT. Until Brexit has actually completed, the UK remains part of the EU wide VAT system. It is therefore of interest that MEPs are to vote on a EU Commission proposal to reduce the rate of […]
The VAT registration limit increases by £2,000 to £85,000 from 1 April 2017. At the same time the de-registration limit increases to £83,000.
Generally speaking VAT registered business have to charge 20% VAT on all supplies (sales) that they make. For certain categories of supplies (e.g. energy saving for residential property) the reduced rate of 5% applies. For yet other goods (e.g. most uncooked food) the zero rate applies. When supplying another VAT registered business, the VAT charged […]
It was announced in the Autumn Statement that from 1st April 2017, “businesses with limited costs, such as many labour-only businesses” will have their VAT flat rate percentage increased to 16.5%. HMRC refers to such businesses as “a limited cost traders”. For such businesses this will remove the benefit of being on the Flat Rate […]
If any of your customers are non-business and based outside of the UK then you have to charge their countries VAT on any electronically supplied services. This can include anything you provide which they access from the internet (information etc). This means that you will be responsible for accounting for VAT in each EU customer’s […]
The crux of the recently highly publicised Uber case is the question of who is supplying the end client. Uber argued it was the drivers supplying the end client: Client buys service (transport) from driver; driver buys service from Uber (logistics). (Uber just an agent) The Employment Tribunal found that it was Uber supplying the […]
If you supply goods or services to businesses outside of the UK you need to consider carefully your UK VAT position. We have a factsheet VAT on International Transactions and would be happy to have a further discussion on this (contact us here). But having sorted out the UK situation, that is not the end […]
There is a general rule barring VAT claims for input tax relating to cars. However two recent cases have highlighted that a company can in certain circumstances claim back VAT input tax on cars bought and used solely in the business. This will be unusual and will be very much the exception to the rule. […]
Default surcharges are penalties raised by HMRC mainly in relation to late VAT returns and payments. These are raised by computer automatically based on facts. When a real life HMRC officer gets involved and hears a traders case, more than half surcharges reviewed are cancelled. If you receive any penalty, or indeed any letters from […]
The default position when charging rent (supply of land or space) is that the supply is VAT exempt, even if your business is VAT registered. If you are not VAT registered then exempt supplies do not count towards the VAT threshold. Any VAT registered business can charge VAT on their rent supplies by “opting to […]
Where employers reimburse their employees 45p per mile for using their own cars they are able to reclaim input VAT based on the advisory fuel rates. In the case of a 1600cc diesel car that would be 1.5 pence per mile. (9p x 20/120). Such a claim needs to be supported by a receipt from […]
A recent tax case (Longridge on Thames v CRC) concluded that a charity providing training services for a fee was trading for VAT purposes. The Court of Appeal said that the charge made by the charity for the training “was more than nominal in amount and was directly relate to the cost of the activity […]
The VAT flat rate rate scheme asks traders to pick a category that matches their trade from a list provided by HMRC. If you do not match one of the trades listed, then you can choose “Any other activity that is not listed elsewhere 12%” Many trades have a higher percentage, including management consultancy at […]
Advisory Fuel Rates from 1 September 2016 When calculating the VAT element of mileage payments, these rates apply from 1 March 2016. You can use the previous rates for up to 1 month from the date the new rates apply. Engine size Petrol – amount per mile LPG – amount per mile 1400cc or less […]
VAT on costs can only be claimed in so far as the costs are attributable to taxable supplies. A recent tax case highlighted the need to apportion input tax claims on business overheads where significant income is exempt or outside the scope of VAT. To discuss any aspect of VAT further please book a chat […]
A recent case has reminded of the need to have proper purchase invoices in order to support VAT input tax claims. In P Brookes v CRC, Upper Tribunal (Tax and Chancery Chamber), 6 April 2016 the taxpayer had claimed input tax on costs for which he had no purchase invoices. The taxpayer then belatedly obtained […]
In a recent case (Airtours Holidays Transport Ltd v CRC, Supreme Court, 11 May 2016) Airtours had paid for services provided by PwC of financial reports that would be used by financial institutions to assess lending to Airtours. Airtours paid PwC fees which included VAT, and went on to claim the VAT as input tax. HMRC […]
Don’t forget that if you have made any EC sales during the quarter ended 31 March 2016 that you need to report these to HMRC on an EC Sales List (ECSL). You can submit your ECSL through HMRC Online Services here, it is possible that you may need to enrol for the service if […]
The VAT registration thresholds increase by £1000 from 1 April: Registration threshold from 1 April 2016 = £83,000 (based on past 12 months or next 30 days) De-registration threshold from 1 April 2016 = £81,000 (based on expected turnover next 12 months) All figures are in our tax rates table. David Wilsdon
The European Court have ruled that the UK blanket reduced VAT rate for energy saving materials is unlawful. The UK government are likely to make restrictions to the reduced VAT rate rules in Finance Act 2016. We don’t have further details yet. Clearly if you are thinking of buying (or if you currently sell) reduced […]
If you make an error on a VAT return then you simply adjust for it on the next VAT return, providing the error does not exceed £10,000. However, if HMRC were undertake a VAT investigation and found the error was caused due to not taking ‘reasonable care’ then they could still charge a penalty. […]
If an employee or director uses their own vehicle for allowable business journeys the company can pay them a tax free allowance to compensate them for this. Reclaiming VAT If the company is VAT registered then they may be able to reclaim some input tax (VAT on purchases) in relation to this payment. VAT is […]
A recent First-tier tribunal has upheld HMRC’s position that a trader cannot ask to be de-registered from VAT from an earlier date. If you find you may be better off de-registering from VAT (usually because some or all of your customers cannot reclaim VAT) and you are below the VAT de-registration threshold (currently £80,000) then […]
Always be suspicious of any email mentioning a refund from a “tax credit office agent”. Look out for links to fake version of the GOV.UK website. Never provide details or similarly sensitive information on the basis of an email request. HMRC’s director general of benefits and credits, Nick Lodge, HMRC, said the department never asks […]
Anyone with an open enquiry (or appeal) concerning a tax avoidance scheme may be issued with follower notices and accelerated payment notices under new legislation in Finance Act 2014. It is understood that 43,000 payment notices will be issued by HMRC (33,000 to individuals and 10,000 to corporates) and will cover about £7.1 billion of […]
Remember that a business registering for the flat rate scheme for VAT is eligible for a 1% reduction from their normal rate for the first 12 months. Get in touch with us if you prepare your VAT returns yourself and would like some further information.
Choosing a flat rate scheme category Deciding on the category for “business activity” when registering for the flat rate scheme can prove tricky. One general approach to take is to consider how the business activity would be described to a person on meeting them for the first time using everyday words where possible, such as […]
A recent VAT tribunal case illustrates how important it is to take proper advice on a business sale. The Ryford Arms was sold by Pontardawe Inn Limited. The purchaser of the premises and goodwill of the Ryford Arms was a company known as Claden Limited; However the fixtures, fittings and equipment were acquired by the […]