Ebay and Amazon pledge to assist with VAT compliance

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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 […]

VAT threshold when more than one business

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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 […]

VAT registration when changing entity type

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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 […]

Does your accounts system comply with MTD for VAT?

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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 […]

Budget News – VAT Threshold

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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.

Reclaiming Input Tax on Director Entertainment

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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 […]

Reclaiming Foreign VAT On Expenses

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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

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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 […]

Staying under the VAT threshold with multiple businesses

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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 […]

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