RELEVANT AS OF 10:00am 03 March 2021
If you need support with any of the Indirect Tax topics below then get in touch with Damian Shirley.
5% VAT RATE for THE HOSPITALITY and TOURISM SECTOR
Continued support for the Hospitality & Tourism sector was announced in the Budget, with the 5% reduced rate of VAT extended for a further 6 months until 30 September 2021.
In addition, to further support businesses to get up and running beyond the summer the Chancellor announced that the reduced rate would only increase to an interim further reduced rate of 12.5% VAT until April 2022.
VAT REGISTRATION THRESHOLD FREEZE
The current VAT registration (and deregistration) thresholds of £85,000 and £83,000 respectively will remain until 31 March 2024.
Information about thresholds can be found here.
COVID-19 VAT DEFERRAL REPAYMENT
Businesses were not required to make VAT payments during the deferral period, they were given until 31 March 2021 to pay any liabilities that were accumulated. However, in September HMRC announced that you can either:
- Pay the deferred VAT in full on or before 31 March 2021
- Join the VAT deferral new payment scheme (snappy title!) to pay the amount which is due in instalments
- Contact HMRC if more time to pay is required (contact HMRC on 0800 024 1222) by 30 June 2021.
The VAT deferral repayment scheme is open from 23 February up to and including 21 June 2020 and will allow you to pay your deferred VAT in equal instalments, interest free. The earlier a business joins; the higher number of instalments will be available! See below:
|If you join by:||Number of instalments available to you:|
|19 March 2021||11|
|21 April 2021||10|
|19 May 2021||9|
|21 June 2021||8|
Checklist to use the online service includes:
- create your own government gateway account (if you do not already have one)
- join the scheme yourself, agents cannot apply (link now available online)
- still have deferred VAT to pay
- be up to date with the submission of VAT returns from the last 4 years – otherwise you will not be allowed to join the scheme
- correct any errors on the VAT returns covered by the deferral (if extra amounts are required to be deferred as a result, contact the Covid-19 helpline on 0800 024 1222)
- join by 21 June 2021
- pay the first instalment on joining
- pay instalments by Direct Debit
- make sure you know how much you owe including the amount you originally deferred and how much you may have already paid
WIDER VAT NEWS
Domestic Reverse Charge VAT for construction services – Live from 1 March 2021
This new scheme, previously delayed because of COVID, is now live, and businesses in the construction sector and urged to consider if they (or their suppliers or customers) fall within in the scheme to ensure compliance. We can offer a consultation to work through this with you and so please in touch at: email@example.com
Notification period for options to tax
Typically, a business is required to notify HMRC of an option to tax over a commercial property within 30 days of the decision being made. HMRC have announced that, for decisions made between 15 February 2020 and 31 March 2021, the notification period will be extended from 30 days to 90 days. Our own view however is that the decision should be notified as soon as possible to HMRC, it can often drop off the radar leaving greater difficulty further down the line. We can help clients with any notification process if it is causing difficulty.
MAKING TAX DIGITAL – Digital links requirements go live in april
Businesses have got enough on their plates at the moment, so HMRC have announced that the soft landing period for Making Tax Digital for VAT is going to be extended until April 2021.
This means that all VAT registered businesses will have more time to put in place digital links between all parts of their functional compatible software. HMRC have updated their original MTD guidance to reflect the extension of the soft landing period– you can view this here.
In the Budget it was announced that Making Tax Digital for VAT will mean that the mandatory rules will apply to smaller businesses from April 2022.
Please see more details of how businesses should prepare for MTD here. Whilst things are naturally quieter through the Covid period, this deferral offers valuable time at this stage to ensure your digital links are ready and you are compliant in the wider sense for MTD.
STAMP TAX 0% banding extended
The £500k 0% SDLT rate band will now end on 30 June, rather than 31 March 2021 as originally proposed. Furthermore, the band will then incrementally increase to £250k before finally returning to £125K in October.
Steady on though… are you considering a purchase of a second home? Pause…there are different rules for people buying second homes. Also, don’t forget that the four corners of the UK all have slightly different versions of stamp tax regimes in place (SDLT in England and NI, LBTT in Scotland, and LTT in Wales). Be careful to check which regime you come under, which set of rates and thresholds apply and when the changes come into force.
Please click HERE to read our further thoughts on this subject.
The planned duty increase for Spirits, Wine, Cider and Beer have been cancelled and therefore frozen for a second year in a row.
In addition, the planned increase in fuel duty has also been scrapped as the Government looks to support both business and consumers in the COVID recovery period.
INTERNATIONAL TRADE AND CUSTOMS
UK to Implement Free Ports?
The Government announced an ambitious plan to introduce 8 new Free Port locations across the UK, with the plan to support international trade in a post-Brexit world. The aim will be to allow businesses to create a free trade infrastructure, likely to be supported by a lower customs cost with reduced rates of duty and VAT.
Brexit – £2,000 Support Fund
The SME Brexit Support Fund is available to support SME’s with training and or professional advice in line with the new customs rules, rules of origin and VAT rules when trading in the EU. The grant can be used for training on how to complete customs declarations, how to manage customs processes and use customs software and systems and specific import and export related aspects including VAT, excise and rules of origin.
If you import goods between into the UK with up to 500 employees and less than £100m annual turnover and require training on all things Brexit related then this could be for you!
The Government also has specific DIT and UK Export Finance support for UK businesses that export or deliver goods and services abroad.
DIT will be able to provide assistance with Customs authorities to ensure smooth clearance of products into third countries, along with wider business continuity support whilst disruption is faced. For assistance, DIT’s business support team can be contacted here, or you can give them a call on 0300 456 3565.
If your international supply chain has been affected, then the DIT has also helpfully confirmed that it has relationships with a global network of businesses across the world and will support businesses in trying to keep the supply chains moving.
If your business is actually operating and delivering projects in other countries, it is important that you follow local guidance and speak to your nearest UK embassy or consulate. The Government also refers businesses to its general advice on overseas business risk in a number of overseas territories. A link to the Government’s extensive country-by-country guidance can be found here.
UKEF Financial support
UK Export Finance (UKEF) will be working with banks and insurance brokers to support businesses in fulfilling their export contracts. It will facilitate guarantees, loans and insurance on behalf of the Government that will protect the export supply chain. Specific examples cited include:
- Assisting with cash flow through a government back working capital scheme;
- Insurance policies to support aborted contracts outside of your control; and
- Support the facilitation of finance for overseas buyers so they can continue to buy your goods and services.
Should you need to discuss matters further with UKEF, then they can be contacted here.