August VATwatch

Bevan VAT Newsletter

VAT Refunds for Overseas Businesses

HMRC has issued a policy paper in relation to refunds of VAT to overseas businesses not established in the EU and not registered for VAT in the UK.

It applies to the year ended 30 June 2020. Originally claims had to be made, with a valid certificate of status, by 31 December 2020. That deadline was previously extended to 30 June 2021 but it has become apparent that, as a result of COVID-19 restrictions, some businesses are struggling to obtain the required certificate. As a result, HMRC has agreed to extend the deadline again, this time to 31 December 2021.

Revenue & Customs Brief 10 (2021)

Collecting Tax Debts after COVID-19

Many businesses have struggled over the last year because of COVID-19 and are continuing to do so, even as restrictions ease. In recognition of this, HMRC has published a paper setting out its policy in relation to collection of debts.

The paper says “Our message to customers is simple: if you can pay your taxes then you should do so – but if you’re struggling, we want to work with you to agree a plan based on your financial position”. Where a business is struggling to pay its taxes, HMRC will discuss affordable options such as setting up a payment plan or offering a short term deferral. If you are struggling to meet tax payment, it is important to discuss it with HMRC as soon as possible.

Read the full paper

Post Brexit Legislation Changes

As is becoming more apparent every day, there have been many things which have happened as a result of Brexit which either weren’t foreseen at all, or which were expected but the impact was downplayed.

As more transactions have taken place following the end of the transition period, issues within the legislation have come to light. 

HMRC says “A review of the EU exit VAT legislation identified a number of errors, omissions and unintended interactions which need to be addressed”. To correct those errors, changes are being made to the legislation which come into effect from 1 August 2021. The areas impacted include:
  • Transport, handling, and storage of goods moving between Great Britain and Northern Ireland
  • Movement of own goods from Great Britain to Northern Ireland
  • Goods sold from the EU to the UK via Northern Ireland & sent by post
  • The second hand margin scheme
  • Correction of errors in relation to postponed import VAT accounting
  • Supplies between Great Britain and Northern Ireland

Read the full summary

Selling Goods Under €150 to Consumers in the EU

HMRC has updated its guidance for the VAT treatment of sales to consumers in the EU from 1 July 2021.  The guidance covers the differing rules for Northern Ireland and Great Britain and explains the Import One Stop Shop (IOSS). There still seems to be some uncertainty as to whether UK businesses can register directly to use the IOSS without an EU intermediary. 

Most commentators are advising that an EU intermediary must be used but the HMRC guidance says “A business not established in the EU or Northern Ireland wishing to register for IOSS will be able to do so in any EU member state or in the UK. However, it is not expected that the UK IOSS registration portal will be available for use for the 1 July 2021 launch. Further guidance will be available soon.” 

We await the further guidance!

Read the current guidance

VAT Grouping Consultation Responses

Back in August 2020, HMRC published a consultation into VAT Grouping, asking for views on the current UK grouping rules and on some potential changes such as compulsory VAT grouping. The responses have now been published and HMRC advise that there were “a substantial number of responses that were generally in favour of maintaining current practices”. In view of that, and the fact that businesses require certainty following Brexit and COVID-19, it has been decided that no further action will be taken.

Read the Responses

Impact of Making Tax Digital

A report has been published examining the impact of MTD for VAT on taxpayers. The study comprised interviews with 2005 businesses that has submitted a VAT Return via MTD. Some interesting statistics from the report are:The proportion of businesses using software for records keeping has increased from 72% to 87%63% of businesses said that making their first submission was easy25% reported transitional financial costs38% reported ongoing financial costs53% of businesses are more confident they are getting the tax right30% of businesses felt that the benefits of MTD outweighed the cost and effort.

The above statistics certainly don’t reflect my experience when discussing MTD with clients but I appreciate that that is probably because I only get called in when there is a problem – no one is going to ring me to tell me how much they love MTD!

Read the full report

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