Covid-19 - MTD & VAT Archives - Grunberg & Co

Top hospitality businesses call for extended VAT cut

admin — Fri, 19 Feb 2021 10:47:29 +0000

Hospitality firms across the UK are urging Chancellor Rishi Sunak to extend the VAT reduction for a year due to the impact of coronavirus.
Last year, the VAT reduction went from 20 per cent to five per cent to support the hospitality, leisure and tourism industry.
The cut ends on 31 March, which worries the sectors as prices could soar on meals, outings and tickets.
UKHospitality organised a joint letter, with support from 166 companies, including hotel chains, which urges Sunak to extend the VAT reduction and business rates holiday in the 2021 Budget.
The letter reads: “Given the right fiscal support in March and safe and sustainable trading conditions in place, we can help this country ‘bounce back’ from the pandemic in a safe and responsible way.”
Extending the VAT cut for a year “will be critical to boosting employment, particularly in 16-24-year-olds”.
“There is no point in the Government undoing all the good work it has done in 2020 by pulling the rug from under us as we get back on our feet,” says Kate Nicholls, CEO of UKHospitality.
For more information or advice on related matters, please contact our experts today.

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The VAT Deferral New Payment Scheme

admin — Thu, 11 Feb 2021 11:23:21 +0000

Any business that deferred VAT payments due between 20 March and 30 June 2020 as a result of the Coronavirus pandemic, must now consider how they will repay this outstanding tax.
They can choose from the following options in order to do this:

Pay the deferred VAT in full by 31 March 2021;
Join the VAT Deferral New Payment Scheme (VDNPS); or
Contact HM Revenue & Customs (HMRC) to agree extra help to pay by 30 June 2021.

The VDNPS will remain open between 23 February and 21 June 2021 and will provide businesses with the option to pay deferred VAT in equal interest-free instalments.
Taxpayers will be given the option to make between two and 11 instalments to suit their needs (the length of repayment may depend on when a business joins the scheme).
Businesses that are already on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, will be invited to join the VDNPS in March.
Other businesses wishing to use the scheme will need to apply online. To use the online service, they must:

Join the scheme themselves – agents cannot directly assist them;
Still have deferred VAT to pay;
Be up to date with their VAT return filings;
Pay the first instalment when they join; and
Pay instalments by Direct Debit (there are alternative payment methods for those without access to Direct Debit on request).

Before joining, businesses must:

Obtain a Government Gateway account – if they do not already have one;
Submit any outstanding VAT returns from the last four years;
Correct any errors on VAT returns as soon as possible; and
Make sure they know how much they owe, including the amount originally deferred and how much you may have already paid.

If a business decides to opt-in to the New Payment Scheme it will not affect its ability to request a Time to Pay arrangement from HMRC for other debts and outstanding tax payments in future.
Businesses who are unable to use the scheme or that need extra help repaying deferred tax must call HMRC on 0800 024 1222 by 30 June 2021.
Businesses may be charged interest or a penalty if they do not pay the deferred VAT in full, opt-in to the VDNPS or seek additional help to repay deferred VAT by the deadlines outlined above.
The Government’s guidance on the VDNPS can be found in full by clicking here.

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MTD: getting the ball rolling after COVID-19

admin — Thu, 04 Feb 2021 14:27:07 +0000

Many aspects of people’s individual and work-lives were on hold in the first half of 2020, due to the coronavirus pandemic – and the implementation of Making Tax Digital (MTD) was no exception.
MTD is a focal part of the Government’s plan to make it easier for businesses and individuals to ensure they keep on top of their affairs and avoid mistakes.
With the pandemic-related delays causing many to complete their tax returns incorrectly and past the deadlines, it prompted the Government to take a ‘dash for digital’ approach to the tax system.
During the lockdowns, when the Government prohibited in-store shopping, many consumers shopped online. This shift meant many digital systems developed remarkably.
In July 2020, the Government announced it would restart the MTD programme and released a timetable showcasing when MTD would begin for income tax. The proposed implementation date is April 2023.
Many tax experts welcomed this news, and the Institute of Chartered Accountants in England and Wales (ICAEW) warned that despite the need to make MTD a reality, it is vital not to rush the digital agenda.
The ICAEW states that for MTD to be successful, “we need to design systems that work for taxpayers and their agents. We also need to ensure that systems are fully tested before they go live.
“The introduction of the capital gains tax 30-day reporting and payment system has been a salutary lesson in what can still go wrong when you design digital tax systems.”
For information or advice on tax-related issues, please contact our expert team today.

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Government confirms the next steps for the digitisation of taxation

admin — Wed, 22 Jul 2020 09:13:08 +0000

The Treasury has released new details on the next steps it intends to take as part of its long-term tax digitisation plan.
Its timeline for a modernised digital tax system will see HM Revenue & Customs’ (HMRC) Making Tax Digital (MTD) programme gradually extended over the next few years to cover most businesses.
Under the current MTD rules, businesses above the VAT threshold of £85,000 are required to keep digital records and provide VAT returns through MTD-compliant software.
However, under the new plan, the programme will be extended to all VAT-registered businesses with turnovers below the VAT threshold (£85,000) from April 2022.
It will then be extended further from April 2023 to all taxpayers who file income tax self-assessment tax returns for business or property income above £10,000 annually.
The Treasury said that the extension of MTD will only affect the way that tax is reported and not the amount that is collected.
Financial Secretary to the Treasury, Jesse Norman, said: “We are setting out our next steps on Making Tax Digital today, as we bring the UK’s tax system into the 21st century.
“Making Tax Digital will make it easier for businesses to keep on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis.”
In a Written Ministerial Statement to Parliament on MTD the Treasury also said that “the Government remains committed to extending Making Tax Digital to other taxes”.
It is hoped that the long deadline to comply with the extension of MTD will give businesses, landlords and agents time to prepare and allow for the development of new products, including free software for businesses with the simplest tax affairs.

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Guidance on hospitality and tourism VAT cut published

admin — Fri, 10 Jul 2020 10:13:04 +0000

HM Revenue & Customs (HMRC) has published guidance on temporary cuts to the rate of VAT from 20 per cent to five per cent from Wednesday 15 July 2020 to 12 January 2021 for certain goods and services in the hospitality and tourism sectors.
The reduced rate was announced by the Chancellor at the Summer Economic Update on 8 July 2020 and applies to:

food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
hot takeaway food and hot takeaway non-alcoholic beverages
sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities

The reduction also applies to admission to the following attractions, where they do not qualify for the cultural VAT exemption:

theatres
circuses
fairs
amusement parks
concerts
museums
zoos
cinemas
exhibitions
similar cultural events and facilities.

The dedicated guidance documents that set out the VAT treatment of catering and takeaway food and hotels and holiday accommodation have also been updated to reflect the temporary change.
The guidance informs small businesses that use the Flat Rate Scheme that certain percentages have been reduced in line with the new temporary five per cent rate of VAT.
Further guidelines also set out the arrangements that apply where supplies straddle the temporary reduced rate

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Details of ‘Eat Out to Help Out’ scheme confirmed

admin — Fri, 10 Jul 2020 10:01:33 +0000

The Government has now confirmed details of the ‘Eat Out to Help Out’ scheme, announced by the Chancellor at his Summer Economic Update on Wednesday 8 July.
The scheme covers the cost to restaurants, cafes and pubs that sell food of providing a 50 per cent discount, capped at £10 per head, on food and non-alcoholic drinks purchased for consumption on the premises from Mondays to Wednesdays in August.
The scheme is open to businesses that were registered with their local authority as food businesses on or before 7 July 2020, provides or shares a dining area for eat-in meals and sells food for consumption on the premises.
HM Revenue & Customs says this could include:

restaurants
cafés
public houses that serve food
hotel restaurants
restaurants and cafes within tourist attractions, holiday sites and leisure facilities
dining rooms within members’ clubs
workplace and school canteens

Participating businesses are expected to provide the offer throughout their opening hours on the days that the scheme is in operation.
The scheme applies to food or non-alcoholic drinks, meaning that a coffee purchased without food to drink in a café’s seating area would be eligible for the discount.
The guidance also gives details of how businesses should apply the discount to customers’ orders. Service charges are not covered, while the £10 a head cap is based on the number of people at the table, including children. This means that the discount available to a table of six would be capped at £60, even if the discount for one or more individuals exceeds the £10 cap, assuming the table is covered by a single bill.
The scheme does not apply to takeaway food and drink, or catering services for private functions. It also does not apply to mobile vans or takeaways that provide tables and chairs on the pavement.
However, the guidance does confirm that the scheme can still be used where a customer orders food for dining in but then takes away the remainder of their meal.
The scheme also cannot be put towards:

alcoholic drinks
tobacco products
food or drink that is to be consumed off-premises
food or drink that is sold as part of a private party, event or function taking place within an eligible establishment

Eligible businesses can register to take part in the scheme using an online portal, which is set to go live from 13 July 2020 here.
The discount can be provided alongside existing offers and comes in addition to a cut in VAT from 20 to five per cent for food and non-alcoholic drinks, as well as for accommodation and admission to attractions, which will apply from Wednesday 15 July until 12 January 2021.

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Remember to reinstate your VAT direct debit in time for your next payment

admin — Thu, 25 Jun 2020 08:05:40 +0000

If you are using the option to defer VAT payments due between 20 March 2020 and 30 June 2020 and you have cancelled your direct debit, you should now ensure that you reinstate your direct debit in enough time for HM Revenue & Customs (HMRC) to take your next payment.
After 30 June 2020, you will need to make your VAT returns and payments as usual and on time.
However, you still have until 31 March 2021 to make any VAT payments you deferred between 20 March 2020 and 30 June 2020. It is up to you whether to pay this amount in a single instalment or several instalments.
Meanwhile, it has emerged that some businesses that have deferred their VAT payments between 20 March 2020 and 30 June 2020 have received ‘failed interim payment’ letters from HMRC. The letters were sent out in error and also include the wrong telephone number, which should be: 0300 322 7873.
If you have deferred your VAT payment and have received such a letter, you may wish to clarify with HMRC by telephone that you have not paid because of the VAT deferral provisions.

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VAT deferral refund available

admin — Mon, 15 Jun 2020 14:39:41 +0000

Taxpayers that wished to defer VAT payments, but did not cancel their Direct Debits in time can claim a refund, according to HM Revenue & Customs (HMRC).
The tax authority has confirmed that taxpayers that intended to defer VAT payments due between 20 March 2020 and 30 June 2020 that were unable to cancel their Direct Debit to HMRC could now do so.
To obtain a refund, taxpayers should submit a Direct Debit Indemnity Claim to their bank. On this submission, all they must state is that they want to claim a refund under the Direct Debit Indemnity Scheme (DDI) and HMRC has said it will honour the request.
HMRC has also said that there will be no time limit in making this request, but businesses are encouraged to do so soon to obtain a quicker refund.
Taxpayers can also request repayment from HMRC directly rather than contacting their bank, but they must ensure that their bank details are updated using the tax authority’s online service.
Due to COVID-19 restrictions, Payable Orders are not being issued and it may take up to 21 days for a refund to be received if the Direct Debit Indemnity Claim process is not used.
HMRC is due to provide further guidance on the payment of tax at the end of the deferral period next March.
Businesses also need to make arrangements to pay VAT falling due from 1 July 2020 to 31 March 2021.

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Government delays VAT Reverse Charge

admin — Mon, 15 Jun 2020 14:38:32 +0000

The Government has announced that the controversial VAT Reverse Charge rules for the construction sector will be delayed until 1 March 2021 due to the Coronavirus pandemic.
The VAT Reverse Charge rules, which effectively transfer the responsibility of paying VAT from a supplier to the business using their services, was originally due to come into force in October 2019 before being delayed for a year until October 2020.
Due to this latest extension, VAT-registered businesses and individuals that supply or receive specified services that are reported under the Construction Industry Scheme (CIS) will now have an additional five months to prepare for the complex new rules.
The Government has also introduced new amendments to the system as part of the delay. These will require firms that are end-users of goods and services to notify suppliers and subcontractors of their status.
HMRC introduced this change to ensure subcontractors are clear as to how to treat VAT payments and charges.
For further details on the rules surrounding the VAT Reverse Charge, please click here to read the Government’s latest guidance.
Despite the latest delay, it is recommended that those businesses that are likely to be affected by the change seek additional support now to make sure they are compliant when the scheme is introduced and not adversely affected by the new rules.

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Changes to notifying an option to tax (VAT) on land and buildings during the Coronavirus pandemic

admin — Thu, 21 May 2020 12:04:06 +0000

HM Revenue & Customs (HMRC) has made temporary changes to the time limit and rules for notifying an option to tax (charge VAT on) land and buildings.
Normally, when notifying HMRC of a decision to opt to tax land and buildings, you usually have 30 days to contact the tax authority either by printing and sending a notification, signed by an authorised person within the business or emailing a scanned copy of the notification.
However, due to the social distancing requirements that remain in place to prevent the spread of the Coronavirus, HMRC has changed the time limit provided – extending it to 90 days from the date the decision to opt was made.
This extension applies to decisions made between 15 February and 31 May 2020. You can email notifications to HMRC by contacting optiontotaxnationalunit@hmrc.gov.uk.
If you are a business sending a notification you can do this by submitting a form, which can be found here, with an electronic signature, as long as you can provide proof that the signature is from a person authorised to make the option on behalf of the business.
This evidence could include emailing the form:

with an email from the authorised signatory to the sender within the business, giving authority to use the electronic signature
from the authorised signatory with their sign off in the email and the form
with an email chain or a scan of correspondence showing the authority given by an authorised signatory.

Similar proof will be required from an agent if you ask them to submit this information on your behalf.

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