The Blog

VAT and Brexit

“Deal or No Deal??”

As Noel Edmunds would say. But what are the implications if the UK exits the EU with no deal in place?

At the moment, the UK has (finally) settled into a trade regime with the EU that has become quite familiar (with one or two areas of possible exception!).

Most transactions in goods or services between businesses established in separate EU Member States are VAT free, allowing for free movement of goods, less administration and, quite frankly, less hassle.

In August of last year, when the possibility of exiting the EU with no deal was very much a  “back-stop” H M Revenue & Customs issued some guidance on what the fundamental changes would be to EU trade in the unlikely event that no deal was reached. This can be found at https: //www.gov.uk/government/publications/vat-for businesses-if-there’s-no Brexit-deal.

The problem is we are now in January 2019 and no deal has yet been reached.

So what does that mean for you if you import or export goods or services?

 

Importing goods from the EU

 As from the 29 March 2019 goods imported from the EU will be treated in the same way as goods imported from outside of the EU. This would normally mean that a UK business would have to pay VAT upon arrival or under a Deferment Scheme- which would necessitate an increase in the level of financial security payable to HMRC and would involve delays in recovering any VAT incurred.

HMRC has therefore said that it will therefore allow UK businesses to account for VAT through their UK VAT returns rather than having to pay the VAT up front or defer it. How long they will allow this to happen is not clear. Interestingly, they will also allow this treatment for imports of goods from outside of the EU- which is a clear advantage.

The completion of Customs declarations and the payment of “any other duties” will still be required and more details on this can be found in the “Trading with the EU if there is no Brexit deal” technical Notice on HMRC’s website. This may well mean that Customs and/or Excise Duty will become payable on goods entering the UK from the EU making them more expensive to purchase.

It is very likely that a UK business importing goods from the EU will need an EORI Number (Economic Operator Registration and Identification scheme number) which is currently required for imports of goods from non-EU countries. HMRC have said they will announce further details on this in due course.

 

Importing services from the EU

 At the moment a UK business does not normally pay VAT to an EU supplier but must “self-account” for any VAT payable and recoverable under the “reverse charge” rules.

This is unlikely to change under current proposals.

 

Exporting goods to businesses in the EU

 The main change here will be the lack of any need for the completion of an EC Sales List.

All UK businesses will need to keep full commercial and official (HMRC) evidence to show that the goods have left the UK and provided they have that, zero-rating may be retained. They are also likely to be required to complete a Customs Declaration when the good leave the UK and the customer is likely to have to pay Customs and/or Excise Duty when the goods arrive in the EU making them more expensive to buy.

Again, and EORI number is likely to be a requirement.

 

Distance Selling

 Currently, if a UK business supplies and delivers goods to “consumers” elsewhere in the EU (ie, private individuals and possibly some charities and not for profit organisations etc) it must apply UK VAT to those sales until a certain turnover threshold is reached when it must then register for VAT in the EU country of arrival.

This rule will no longer apply. All such sales will be zero-rated in the UK (subject to obtaining and retaining commercial and official evidence of removal of the goods from the UK) and it is likely that any EU registrations that have been put in place as a result of the Distance Selling Rules will need to be cancelled.

Goods stored in the EU for sale in that country

 UK businesses who store their goods elsewhere in the EU (for example, in a warehouse) are likely to be required to register for VAT in the EU country concerned.

Exporting services to businesses in the EU

Again, under current rules provided the EU business supplies its’ EU VAT number or alternative evidence of being “in business” no UK VAT need be charged (in most cases). This is unlikely to change.

Mini One Stop Shop (MOSS”)

 At present suppliers of intra-EU digital services to consumers elsewhere in the EU can register for MOSS in the UK as an alternative to having to register in each EU country of delivery. If no Brexit deal is reached, this Scheme will no longer be available to UK businesses.

UK businesses will either have to register for VAT in each EU Member State or register with HMRC for the MOSS “non-Union” Scheme as soon as possible. Further details on the non-Union MOSS Scheme can be found on the HMRC website.

SUMMARY

The HMRC Guidance referred to above gives additional information on other areas that may be affected.

 However, I think it is safe to say that whether we leave the EU with a deal or without one, change is on the way and any business importing from or exporting to the EU should prepare for that change-when we know exactly what it is!

What is IR35?

What is IR35?

In most professions, it’s not uncommon for businesses to outsource certain tasks or services to external suppliers.

From a tax and accounting perspective, it’s a process that’s always been relatively straightforward. However, things have become more complex as a result of IR35, which was first implemented almost 20 years ago.

IR35 is the reference term given to a specific area of tax legislation which also now gets referred to as the ‘off-payroll working rules’

Why was it introduced?

IR35 guidance was introduced by the Government in 2000 to help prevent contractors, or ‘disguised employees’ fraudulently claiming to be contractors to gain tax and National Insurance Contributions (NICs) advantages.

It is possible for contractors who do not comply with the rules to pay significantly less income tax and NIC than an equivalent employee. HMRC currently estimates that the cost of non-compliance could reach £1.3 billion a year by 2023/24.

Who does it apply to and when does it apply?

IR35 applies to contractors who work through their own limited companies.  These tend to be Personal Service Companies (PSC’s). IR35 does not apply to self-employed individuals.

All ‘relevant engagements’ in which a contractor provides services to a client through a limited company are governed by IR35. If the work that’s being carried out is considered as being the same as if the contractor were employed by the client, then IR35 is likely to apply.

If IR35 does apply, what does this mean for employers and contractors?

  • Employers – are responsible for paying Employer’s NICs and paying across to HMRC all PAYE tax and NIC deductions made from contractor payments.
  • Contractors – should expect to be taxed like a normal employee, with Employee’s NICs and Income Tax deducted from their pay. Significant changes took place from 6th April 2017 whereby the vast majority of limited company contractors working for public sector clients became “deemed employees” of the public sector body or engaging agency. As at 6th April 2017 the public sector body became responsible for deciding whether or not IR35 applied. Where it did then PAYE tax and NIC was automatically deducted from payments made to the contractors by the public body or engaging agency.

Forthcoming changes 

In the 2018 Budget, it was announced that legislation relevant to IR35 would be amended further to extend the guidance relating to the public sector into parts of the private sector by April 2020.

This would mean that, from 6 April 2020, all medium and large businesses will be responsible for deciding whether IR35 applies to the contractors who work for them. Where it is determined that the rules do apply, the business, agency, or third party that pays a contractor’s company will need to deduct income tax and employee NICs and pay employer NICs.

Does IR35 apply to me?

While IR35 may have been in existence for many years, it is not always 100 per cent clear for contractors or clients to clarify if it applies to them or not.

Some contractors who are clearly governed by IR35 have found working under an umbrella company to be the most effective and compliant route however, this doesn’t mean it’s the best option for everybody.

HMRC has developed an online checking facility to help contractors check their employment status (the CEST) and, don’t forget, it’s also possible to seek guidance and advice from your accountant. Here at Ormerod Rutter, we have a dedicated tax specialist, Anthony Middleton, who monitors all of our clients’ tax investigations and deals with Corporation Tax, Income Tax enquiries and IR35 queries.

For more information about IR35 or guidance on whether or not your work is governed by it or not, contact us on 01905 777600 

Do I need to complete a Self Assessment Tax Return?

Knowing whether you need to complete a Self Assessment Tax Return can be tricky.

If you’re not sure if you need to do one, or not, here’s a little guide.

You must complete a Tax Return if:

  • You are a sole trader and the money you receive is more than £1,000
  • You are a partner in a business partnership
  • You are a company director
  • You have Capital Gains Tax to pay
  • You are employed and want to claim expenses of £2,500 or more
  • You receive income from:
    • Overseas that is liable to UK tax
    • Trusts, settlements and estates

 

Even if you pay tax each month through your PAYE code on your salary you may need to complete a Tax Return if you have income of:

  • £100,000 or more
  • £10,000 or more from taxed savings and investments
  • £2,5000 or more from untaxed savings and investments
  • £2,500 or more from property income after deducting allowable expenses (or £10,000 or more before expenses)

Or, if the following applies then you are subject to the High Income Child Benefit Charge and must complete a Tax Return:

  • Your income is more than £50,000
  • You, or someone in your household, claims Child Benefit
  • You are the higher earner

We can also complete your Self Assessment Tax Return for you and submit it to HM Revenue and Customs on your behalf, cutting out the stress and worry of having to do it yourself and allowing you to focus on doing the things you love.

For more information, please give us a call on 01905 777600.

Why it doesn’t pay to sit on your self assessment tax return

Why it doesn’t pay to sit on your self assessment tax return

 When you’re running a business, there’s a lot to consider and stay on top of. Daily deadlines, monthly deadlines, yearly deadlines, not to mention your responsibilities, as well as your employees’ responsibilities.

There are also work-related tasks and company-related tasks, such as filing your self assessment tax return, to consider. And, while HMRC may issue reminders at the end of the tax year, self assessment tax returns are yet another task that’s often completed by businesses at the last minute or late.

According to figures published by HMRC earlier this year, almost 10.7million taxpayers submitted their self assessment before January 31, with just over 30,000 people filing online in the final hour, between 11pm and 11.59pm. However, of the 11.4 million returns that were due, around 745,500 were still outstanding after January 31.

 

Aside from failing to meet a key business obligation within the agreed timescale, there are numerous reasons why businesses should complete their tax return on time or, where possible, early. We’ve listed three of them below:

  1. You won’t be fined

All late returns automatically incur a £100 penalty fine, which applies even if there’s no tax to pay or if the tax that’s due is paid on time. And if your return is more than three months late, the penalty can quickly become very costly. What’s more, HMRC are tightening the rules and the penalties are getting stricter, so it really does pay to get on top of, and stay on top of, your tax affairs.

  1. You’re less likely to make mistakes

Self assessment tax returns that are left to the last minute and then rushed through very often contain mistakes.

Miscalculating your tax means you could wind up paying too much or too little which, in turn, can leave you open to fines. You’ll also be liable for any interest on unpaid tax, if you’ve not paid enough.

  1. You’ll have a clearer picture of your business finances

Submitting your tax return early will enable you to see how your finances look sooner, rather than later. You’ll also be in a much stronger position to organise your cash flow accordingly so that you have the necessary funds to pay your tax.

Note: Just because you file your tax return early doesn’t mean you have to pay your tax bill at the same time. If you submit your return before December 31, you may be able to opt to have your unpaid tax collected through your tax code and PAYE system.

Got any questions or perhaps you’d like some advice or support in relation to submitting your next self assessment tax return?

We can take care of your self assessment tax returns, giving you peace of mind that you’ll never miss a deadline. We can also work with you to structure your affairs in the most tax efficient way to make sure you keep more of the money you work hard to earn.

For more details about how we can help, contact us on 01905 777600 or hello@ormerodrutter.co.uk.

‘Can the work Christmas party be claimed back as a business expense?’

‘Can the work Christmas party be claimed back as a business expense?’

Knowing which work-related outgoings can be classed as a business expense can be bit of grey area for companies to understand.

One area that many businesses aren’t always too clear about is whether or not they can class their work Christmas party as a business expense.

HMRC does provide incentives for limited companies, but unfortunately not for sole traders. A 19% tax exemption via Corporation Tax on all festive entertaining costs is currently permitted, providing the:

  • Party is an annual event
  • Party doesn’t cost more than £150 (including VAT) per person
  • Is open to all employees (and consists mostly of employees)
  • Shareholders aren’t included in the exemption if they aren’t employees or directors

What’s more, it’s also possible for businesses to claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner.

However, it’s important to remember that this is an exemption, not an allowance

So, if your party costs £151 (or more) per person, you cannot claim the first £150 as a business expense – the whole thing will be taxed as normal.

Many limited companies hold more than one annual event. Limited company contractors are free to do the same too. For example, you could choose to hold both a Christmas event and a summer function. Providing the total combined costs of each individual event do not exceed the maximum £150 per head, the tax exemption still applies.

If any individual event costs exceed this, then HMRC will only apply the exemption to expenses for the events that fall within the allowable limit.

 For more guidance and support on whether your Christmas party is tax deductible or for general advice on business expenses, contact us on 01905 777600 or hello@ormerodrutter.co.uk.

Autumn Budget 2018 – key tax highlights

Autumn Budget 2018 – key tax highlights

 

Chancellor, Philip Hammond, delivered his third Budget on Monday (October 29) at a time of continued economic uncertainty fuelled by the on-going Brexit negotiations.

 

The last Budget to be delivered before Brexit, the Autumn Budget 2018 lasted 72 minutes and was used by the Chancellor to say that the era of austerity ‘is finally coming to an end.’ He also predicted that UK borrowing this year would be £25.5 billion – £11.6 billion lower than predicted in March.

 

A number of wide-ranging measures were announced by the Chancellor, which will impact both businesses and individuals. They include making a one-off payment of £400 million for schools to allow them to ‘buy the little extras they need.’

 

Mr Hammond also revealed a further £650 million will be given in grant funding to local authorities to spend on social care, an extra £20.5 billion will made available to the NHS over the next five years and all first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers’ relief. There will be a freeze on fuel duty for the ninth year in a row.

 

From a tax perspective, key highlights include:

 

  • The Annual Investment Allowance will be increased from £200,000 to £1 million for a period of two years from 1st January 2019

 

  • Lettings relief from Capital Gains Tax on let property, which has been the owner’s main residence, will in future only be available where the owner occupies the property with the tenant. This relief is currently worth up to £80,000 in terms of the reduction of capital gain for a married couple. The change takes effect from April 2020.

 

  • Currently the last 18-month period of ownership of a main residence is deemed to be owner occupation for the purposes of the PPR Capital Gains Tax exemption. That 18-month period will now be reduced to nine months; That change starts from April 2020.

 

  • The current qualifying period for Entrepreneurs’ Relief is to be increased from 12 months to two years; Starting from 6th April 2019.

 

  • The IR35 public sector rules are to be extended to the private sector. This extension will be delayed until April 2020 and will only apply to large and medium-sized businesses

 

  • The Personal Allowance will be increased to £12,500 from April 2019

 

  • The Higher Rate threshold will be increased to £50,000 from April 2019

 

The points listed below are an overview of some of the key points that were announced in the Autumn Budget 2018. The full details can be found here –  https://www.gov.uk/government/publications/budget-2018-documents/budget-2018

 

For one-to-one advice on any of the issues raised in the Chancellor’s latest Budget speech or for guidance on making sure your accounts are up-to-date and submitted in a timely manner, as well as making sure your profitability is kept to a maximum and your tax liability to a minimum, contact David Gillies on 01905 777600.

Capital Gains on UK property sold by non-UK residents – explained

What is the definition of Capital Gains Tax?

According to HMRC, Capital Gains Tax (CGT) is defined as – ‘A tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.’

For example, you buy a house for £100,000, but then decide to sell the same house at a later date for £150,000. This means you have made a capital gain of £50,000.

What do I do if I’m a non-UK resident and have sold UK residential property?

If you’re not living in the UK, but have sold or disposed of a residential property in the UK on or after 6th April 2015, keep reading because this post tells you everything you need to know, starting with how long you have to declare the sale of the property and HMRC’s definitions of whether you’re a UK resident or a non-UK resident.

How long do I have to declare the sale of UK residential property?

Non-UK residents are obliged to tell HMRC about any CGT on UK residential property within 30 days of the property sale; even if there’s no CGT to pay. For example, if you sell the property on 1st July 2018, you must make a declaration to HMRC by 31st July 2018.

You must report the disposal using the Non-resident Capital Gains Tax Return within this deadline even if:

  • There’s no tax to pay
  • A loss has been made
  • You’re registered for Self-Assessment
  • You’re registered with HMRC for Corporation Tax

If the property in question was owned by more than one individual, each owner must complete the Non-resident Capital Gains Tax Return.

UK resident vs non-UK resident

UK resident

You’re always going to be classed as a UK resident if:

  • You spend 183 or more days in the UK in the tax year
  • Have a home in the UK – you must have owned, rented or lived in this property for at least 91 days in total – and spent at least 30 days in the country in the tax year

These are just a couple of the ways you can qualify as a UK resident, but it’s not always this simple and some cases can be very complex, so it’s always best to seek expert advice rather than make any assumptions.

Non-UK resident

You’re always going to be considered as a non-UK resident if:

  • You spend less than 16 days in the UK (or 46 days if you haven’t been classed as a UK resident for the three previous tax years)
  • Work abroad full-time (averaging at least 35 hours a week) and spend fewer than 91 days in the UK, of which no more than 30 were spent working

If you need more of a steer on whether or not you fall into the UK resident or non-UK resident bracket, get in touch and we’ll be more than happy to help you identify the correct status.

Calculating payment

You may have to pay any CGT within the same 30-day period you have to declare your disposal. However, there are possible exceptions, such as being enrolled in Self-Assessment. If this is the case, then you can either pay the outstanding tax liability when you submit your Tax Return or on your normal payment date – the first 31st January after the end of the relevant tax year.

However, with all of the various different categories, rules and deadlines relating to CGT for non-UK residents, it can be confusing and difficult to know if your calculations are correct and when you need to submit payment by. Failure to report the sale of your property and pay any tax that’s owing can result in you receiving a penalty of £700 or 5% of any tax that’s due, whichever is greater.

Seeking specialist guidance and support, like the help that’s provided by our dedicated tax team, will guarantee that your CGT obligations have been established and calculated accurately and that you’ve fulfilled your HMRC obligations fully with minimum hassle and fuss.

If this post applies to you and you’d like a hand with any element of the CGT process, then please contact us on 01905 77600 or hello@ormerodrutter.co.uk.

National Minimum Wage increase: Are you paying the correct amount?

Every year, the Government increases the National Living Wage, which is also widely referred to as the National Minimum Wage.

At present, the rates, which determine the minimum pay per hour most employees are legally entitled to, look like this:

But come April 1, the current rates will increase to:

What does this mean for employers?

While the increase may be a standard UK-wide increase, there’s nothing standard about how it’s calculated, as there are several different variables, such as age and apprenticeship rules, involved.

As a result, some employers aren’t interpreting minimum wages accurately, with non-compliance resulting in them being penalised by the Government. Take major retailer, John Lewis, for instance, who reported in their 2017 Annual Report and Accounts that for some months, some of their workers had been paid less than the stipulated hourly rate:

‘We have identified that some of our pay practices, though designed to help Partners, have technically not complied with the National Minimum Wage (NMW) Regulations.

‘This has come about in the main because our pay averaging arrangements do not meet the strict timing requirements of the NMW Regulations; although Partners will, over the course of a year, usually have received the correct pay, in some months where greater than average hours are worked they will have been paid less than the hourly rate stipulated in the NMW Regulations.

‘The £36.0m exceptional charge principally relates to payments that are required to be made to recipient Partners and former Partners for the previous six years. We are now required to make good those amounts…’ 

While John Lewis may be at the larger end of the scale in terms of their size, this doesn’t mean that National Minimum Wage errors are only detected within bigger organisations. All companies of all sizes struggle to get these calculations correct each year and, as a result, they’re all at risk of being punished for failing to maintain compliance.

What should employers do?

It’s important businesses fully understand their National Minimum Wage obligations and what the correct associated payments are, as non-compliance can come at a real hefty price.

In February this year, the Department for Business, Energy and Industrial Strategy took the unprecedented move of naming and shaming more than 350 companies who had underpaid their workers. What’s more, as well as enforcing that all underpayments were made, HMRC also issued penalties in the region of £800,000.

With the Government really stamping down on National Minimum Wage offenders, it has never been so crucial for employers to make sure their payroll administration is accurate.

That’s where our PAYE health checks can help. They’re specifically designed to identify and rectify any potential PAYE (and VAT) problems before they’re picked up by HMRC. You’ll find out more about them in our blog, ‘Have your PAYE and VAT affairs been given a clean bill of health?’

While it may be tempting to assume your National Minimum Wage calculations are correct, it really does pay to get them checked by a professional – it’ll a) give you peace of mind that you don’t have anything to worry about and b) you won’t be appearing on the Government’s next named and shamed list.

To find out more about maintaining National Minimum Wage compliance or our health checks, contact us on 01905 777600 or hello@ormerodrutter.co.uk.

Autumn Budget 2017 Summary

Chancellor Philip Hammond presented the 2017 Autumn Budget against a backdrop of ongoing economic uncertainty. The Office for Budget Responsibility revised down its outlook for productivity growth, business investment and GDP growth across the forecast period.

The Chancellor announced a range of measures that will affect businesses and individuals, including the immediate abolition of stamp duty land tax for first-time buyers on homes worth under £300,000, and a rise in the tax-free Personal Allowance to £11,850 from April 2018.

Also unveiled in the Autumn Budget was a change to business rates revaluations: these will now take place every three years, as opposed to every five years, beginning after the next revaluation, currently due in 2022. The Chancellor also addressed the issue of the so-called ‘staircase tax’.

Our informative Budget Report provides an overview of the key announcements arising from the Chancellor’s speech. However, it also looks beyond the headline-grabbing measures, offering detail on the less publicised changes that are most likely to have an impact upon your business and your personal finances.

Additionally, throughout the Report you will find useful tips and ideas for tax and financial planning, as well as an informative 2018/19 Tax Calendar.

Don’t forget, we can help to ensure that your accounts are up-to-date and filed in a timely manner, as well as making sure that your profitability is kept to a maximum and your tax liability to a minimum.

Click here to download the our Autumn Budget 2017 Summary.

If you would like specific, one-to-one advice on any of the issues raised in the Chancellor’s Autumn Budget speech, please do call me on 01905 777600.

* Image by Twocoms / Shutterstock.com

Should conveyancers class search fees as disbursements?

It’s a tricky question and one that’s been attracting widespread interest and speculation as a result of the recent Brabners V The Commissioners for HMRC case.

This particular case has really caused a stir within the world of conveyancing as it questioned whether or not electronic searches should be classed as disbursements when charging conveyancing clients.

Brabners V The Commissioners – a quick case overview

Brabners argued that these searches should be classed as disbursements because they are conducted at their clients’ request and the search reports belong to their clients. All solicitors have historically treated this cost as a disbursement that’s incurred on behalf of the client, which means it isn’t subject to VAT.

However, HMRC challenged this practice by arguing that these searches form part of the overall service that’s provided by solicitors and should therefore be subject to VAT.

Last month (September), the judge concluded that search fees should not be treated as disbursements and are therefore liable for VAT to be charged. The decision was based on the fact that Brabners prepares separate reports on the search results and is therefore using the search information as part of its overall service. As a result, Brabners were liable to pay more than £68,000 in VAT.

What does the ruling mean for conveyancers?

Ideally, solicitors need to err on the side of caution. This particular case may potentially be appealed as it appears to directly contradict the principles previously agreed between HMRC and The Law Society.

The Law Society has stated that it’s currently considering the implications of the case findings and intends to provide solicitors with updated advice as soon as possible.

Until that guidance is given and a clear outcome has been reached, the best option for solicitors is to make sure they don’t treat search fees as disbursements. If they do, they run the risk of potentially becoming the next Brabners and having to pay thousands of pounds in unpaid VAT in the process.

If you’re unsure about what the recent ruling means for your business or would like some more advice about the situation, contact VAT Specialists on 01905 777600 or hello@ormerodrutter.co.uk.

VAT: Flat Rate Scheme Changes

HMRC has announced that, as from the 1 April 2017, all businesses using the Flat Rate Scheme or intending to use the Scheme will have to consider (in addition to the existing conditions) whether or not their VAT inclusive expenditure on goods is either:

  • less than 2% of their VAT inclusive turnover in a prescribed accounting period; or
  • greater than 2% of their VAT inclusive turnover but less than £1000 per annum, or proportion thereof (ie, £250.00 per quarter or (£83.33 per month).

If this criteria is met then the business will be regarded as a “limited cost trader” and MUST apply a fixed Flat Rate percentage of 16.5% to its’ VAT inclusive turnover.

All businesses using or considering using the Flat Rate Scheme should now review their status.

If you would like to discuss anything in this article please contact either David Pegg or Leanne Macgregor on 01905 777600

Pre VAT registration input tax claims – HMRC approach challenged

Have you been affected by HMRC seeking to restrict input tax claims on pre VAT registration costs?

A newly VAT registered fully taxable business has historically been allowed to fully recover VAT incurred in the following circumstances:

  • on services incurred up to 6 months prior to VAT registration and that have not been supplied on to a third party
  • on stock and assets purchased up to 4 years prior to VAT registration, to the extent that the goods or assets are still on hand at the date of VAT registration and are being used by the business (an apportionment may be required if some have been sold).

However, HMRC has recently been seeking to restrict VAT on qualifying goods and services by attempting to view the “use” of such goods or services over their useful, economic life, and dis-allowing, proportionately, any “use” of the goods, assets or services prior to VAT registration.

A number of businesses have received Assessments of VAT or have been instructed to amend their VAT returns.

This approach has been found to be incorrect and inconsistent with EU legislation and HMRC has now issued Revenue and Customs Brief 16 (2016) confirming that taxpayers who have been assessed or had their input VAT restricted in this way may now seek a refund.

Correcting Errors – Making a Claim?

If you need help with making an input tax claim, please contact us now.

Be warned there are time limits in place to correct errors, which are as follows:

  • 4 years from the end of the VAT period in which any adjustment was made; or
  • 4 years from the end of any VAT period Assessed by HMRC.

If you would like to discuss anything in this article please contact either David Pegg or Leanne Macgregor on 01905 777600.

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