404 Not Found | High Path VAT Consultancy https://www.highpathvat.co.uk Experienced VAT services and advice in the Somerset and the South West Thu, 07 Mar 2024 12:56:54 +0000 en-GB hourly 1 https://wordpress.org/?v=6.2.4 Proof of Export – exports using the Customs Declaration Service (CDS) https://www.highpathvat.co.uk/proof-of-export-exports-using-the-customs-declaration-service-cds/ https://www.highpathvat.co.uk/proof-of-export-exports-using-the-customs-declaration-service-cds/#respond Thu, 07 Mar 2024 12:51:41 +0000 https://www.highpathvat.co.uk/?p=1436 The supply of goods exported from the UK is zero rated as long as certain conditions are met.  One of those conditions is holding evidence that the goods have actually left the UK.

The declaration of exports is now largely handled through the Customs Declaration Service (CDS) and soon all exports will have to be declared using this system.

Under the previous system the official evidence that the goods had left the UK was the Goods Departed Message (GDM) . Under CDS there are no Goods Departed Messages and therefore you must keep a copy of the CDS export declaration if you are relying on official evidence.  You can also use commercial evidence to provide proof of export but this can be difficult to obtain.  Types of acceptable commercial evidence are set out in VAT Notice 703.

If you do not keep acceptable evidence of export the goods revert to their normal UK VAT liability, so it is essential that you have systems in place to capture and keep adequate evidence of export.

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More green technology to benefit from the zero rate https://www.highpathvat.co.uk/more-green-technology-to-benefit-from-the-zero-rate/ https://www.highpathvat.co.uk/more-green-technology-to-benefit-from-the-zero-rate/#respond Tue, 30 Jan 2024 14:43:37 +0000 https://www.highpathvat.co.uk/?p=1433 As announced in the Autumn Statement, the definition of “Energy Saving Materials” (ESMs) is being extended to include certain technologies (see below).  The installation of ESMs in residential property is currently zero rated.

The relief will also be extended to the installation of ESMs in buildings that are solely used for a relevant charitable purpose. “Relevant charitable purpose” has a specific meaning for VAT purposes so seek advice if you are not sure if your building qualifies.

The relief will also cover certain preparatory groundworks that are needed to instal ground-source and water-source heat pumps.

All the above changes will take effect from 1 February 2024.

Additional technologies eligible for relief from 1 February 2024;

  1. Electrical batteries that store electricity generated by certain ESMs or taken from the National Grid.
  2. Water-source heat pumps.
  3. Diverters that enable excess electricity from certain ESMs to be used within the building in which it is generated rather than being exported to the National Grid.

Notes

The relief only applies to the installation of ESMs. If you buy ESMs without installation you will be charged VAT at the standard rate (currently 20%).

The relief applies only to the specific technologies set out in the VAT Notices, other energy saving products or systems are not eligible for this relief.

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The DIY Housebuilder Scheme goes digital https://www.highpathvat.co.uk/the-diy-housebuilder-scheme-goes-digital/ https://www.highpathvat.co.uk/the-diy-housebuilder-scheme-goes-digital/#respond Wed, 06 Dec 2023 10:23:58 +0000 https://www.highpathvat.co.uk/?p=1429 If you are building a house for yourself you have long been able to claim the VAT on building materials using a special scheme, the DIY Housebuilder Scheme. The scheme can also be used by people converting a non-residential building into a house for themselves to claim VAT on the conversion costs.

However, the scheme had hardly changed over the years and two issues caused particular problems for claimants.  The first was the deadline of three months after completion of the house in which to submit the claim.  The second was the requirement that the claim was made on paper accompanied by the original invoices.

After years of complaints from the tax profession and other interested parties the regulations relating to these two issues have finally been changed.

Deadline for submission of claims

For houses completed before 5 December 2023 the deadline remains 3 months after completion.

For houses completed on or after 5 December 2023 the deadline is 6 months after completion.

What HMRC means by completion can be confusing, and has led to many tribunal cases, so you must read the DIY claim guidance carefully to understand when your house is complete for the purposes of the claim.  The date of completion sets the clock running on the period in which you must submit the claim.

Online submission

The claim may now be submitted online.  You will need a Government Gateway account in order to use the service.

HMRC guidance on making a claim is at https://www.gov.uk/government/collections/vat-refunds-using-the-diy-housebuilder-scheme

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No more VAT registration applications on paper https://www.highpathvat.co.uk/no-more-vat-registration-applications-on-paper/ https://www.highpathvat.co.uk/no-more-vat-registration-applications-on-paper/#respond Fri, 10 Nov 2023 16:35:12 +0000 https://www.highpathvat.co.uk/?p=1425 HMRC is withdrawing the downloadable VAT1 from Monday 13th November.

From 13th November all applications are expected to be submitted via the online VAT Registration Service (VRS) unless the the applicant falls into one of the categories that currently cannot use the VRS. If you fall into one of these categories you will need to call the VAT helpline for an alternative method of applying.

Those who are digitally excluded and cannot apply via an agent can also call the VAT helpline for assistance.

If you are applying for a VAT registration online you must first have a Government Gateway account.  If you do not already have a Government Gateway account guidance on setting one up is available here https://www.gov.uk/log-in-register-hmrc-online-services/register   Businesses have to set up as an “organisation” even if a sole trader. Once the government gateway account is set up the business then needs to set up a “business tax account” which can be used to access HMRC’s online services including VAT registration.

 

 

 

 

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New penalties for late VAT returns https://www.highpathvat.co.uk/new-penalties-for-late-vat-returns/ https://www.highpathvat.co.uk/new-penalties-for-late-vat-returns/#respond Thu, 05 Jan 2023 12:55:33 +0000 https://www.highpathvat.co.uk/?p=1416 For VAT periods beginning on or after 1 January 2023 there is a new method of calculating whether a penalty is due and the amount of the penalty.  The previous default surcharge regime will continue to apply to VAT periods beginning before 1 January 2023.

There is now a points system for late filing (similar to points on a driving licence). A point is incurred for each late filing up to a maximum number of points (the penalty point threshold) that depends on the frequency of returns that are due; there are different thresholds for monthly, quarterly and annual filing.

If you reach the penalty point threshold you must pay a fixed penalty of £200 in respect of the late return that takes you to the threshold.  You stay at the threshold until you submit a consecutive number of returns on time, this number depends on whether you file monthly, quarterly or annually. You must also submit any overdue returns in the previous 24-month period.

As long as you are at the threshold any further late VAT return will incur another £200 penalty.

If you file all the necessary returns on time and file any overdue returns the points total is reset to nought.

If you do not reach the penalty point threshold any points you incur are cancelled after a period of two years (or slightly more in some cases).

You need to be aware of the how the new system could apply to your returns, depending on whether you are a monthly, quarterly or annual filer.

See  https://www.gov.uk/guidance/penalty-points-and-penalties-if-you-submit-your-vat-return-late

IMPORTANT: The new penalties will also apply to nil and repayment returns.

This is different from the default surcharge regime.  If, in the past, you have been relaxed about late filing because the return is a nil or repayment return you must make sure you can file future returns on time.

Penalties on late payment of VAT

At the same time HMRC is changing the way that penalties apply to the late payment of VAT. These are separate from and additional to the penalties on late filing.

Interest will also be charged on late payment of VAT and penalties.

See https://www.gov.uk/guidance/how-late-payment-penalties-work-if-you-pay-vat-late

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Autumn Statement – fiscal drag https://www.highpathvat.co.uk/autumn-statement-fiscal-drag/ https://www.highpathvat.co.uk/autumn-statement-fiscal-drag/#respond Fri, 18 Nov 2022 16:14:55 +0000 https://www.highpathvat.co.uk/?p=1413 The only paragraph relating to VAT in the Autumn Statement announced that the current VAT registration and deregistration thresholds will remain unchanged for a further two years from 1 April 2024. The high rate of inflation means that more businesses will be brought into the VAT regime over the next few years just by the effect of fiscal drag.

The registration threshold has been £85,000 since 2017.

 

 

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No alternative to filing via MTD for most VAT registered businesses from 1 November https://www.highpathvat.co.uk/no-alternative-to-filing-via-mtd-for-most-vat-registered-businesses-from-1-november/ https://www.highpathvat.co.uk/no-alternative-to-filing-via-mtd-for-most-vat-registered-businesses-from-1-november/#respond Thu, 25 Aug 2022 10:52:30 +0000 https://www.highpathvat.co.uk/?p=1407 From 1 November 2022 the old VAT online facility for submitting returns will not be available unless the business has obtained exemption from Making Tax Digital (MTD).  Businesses using VAT Annual Accounting will be able to use this facility until 15 May 2023.

All VAT registered businesses should now keep digital records and file their VAT returns through MTD-compatible software, unless they have obtained an exemption from MTD. It is currently still possible to use the old online facility to file VAT returns but once a business has signed up for MTD this facility is withdrawn.  From 1 November it will be withdrawn automatically for those businesses that have not signed up for MTD unless they have been granted exemption.  If businesses do not have MTD-compatible software, or have not made arrangements to submit their VAT returns via MTD, they will not be able to submit the returns. This could result in penalties for late or unfiled returns.

If you are already exempt from VAT online filing you will also be exempt from MTD.

If you think you should be exempt from MTD because:

  • of your age, a disability or where you live (no or poor internet access)
  • you object to using computers on religious grounds
  • of any other reason why it’s not reasonable or practical to keep digital records

you can ask HMRC for exemption, see http://of your age, a disability or where you live you object to using computers on religious grounds of any other reason why it’s not reasonable or practical

If you haven’t yet signed up for Making Tax Digital or claimed exemption you need to take action now.

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12.5% hospitality rate ends on 31 March 2022 https://www.highpathvat.co.uk/12-5-hospitality-rate-ends-on-31-march-2022/ https://www.highpathvat.co.uk/12-5-hospitality-rate-ends-on-31-march-2022/#respond Wed, 30 Mar 2022 15:12:17 +0000 https://www.highpathvat.co.uk/?p=1400 Since 1 October 2021 a special VAT rate of 12.5% has applied to certain supplies of hospitality, holiday accommodation and entry to attractions.

With effect from 1 April 2022 the VAT rate on these supplies reverts to the standard rate of 20%.

The normal rules apply to supplies that straddle that date, for instance, where a deposit is received before 1 April and the supply is made on or after 1 April.

The Flat Rate Scheme rates will also be amended accordingly.

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Zero rate extended to installation of green technology https://www.highpathvat.co.uk/zero-rate-extended-to-installation-of-green-technology/ https://www.highpathvat.co.uk/zero-rate-extended-to-installation-of-green-technology/#respond Wed, 30 Mar 2022 15:09:49 +0000 https://www.highpathvat.co.uk/?p=1398 As announced in the Spring Statement, with effect from 1 April 2022 the installation of energy saving materials and green energy generation equipment in residential property will be zero rated.  The zero rating will be available for a period of five years.

The zero rate applies to the installation of these items so that if you buy just the materials these will still be standard rated.

The previous conditions relating to “social need” and to the labour content having to be at least 60% of the cost of the installation will no longer apply.

The zero rate will also apply to the installation of wind and water turbines that have not been covered by the previous reduced rate since 2019.

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VAT on early termination fees and compensation payments – take two https://www.highpathvat.co.uk/vat-on-early-termination-fees-and-compensation-payments-take-two/ https://www.highpathvat.co.uk/vat-on-early-termination-fees-and-compensation-payments-take-two/#respond Wed, 09 Feb 2022 11:01:59 +0000 https://www.highpathvat.co.uk/?p=1393 VAT ON EARLY TERMINATION FEES AND COMPENSATION PAYMENTS

On 2 September 2020 HMRC announced that the VAT treatment of cancellation and early termination fees had changed.  In the past these payments have usually been regarded as compensation and so outside the scope of VAT.  However, following two EU cases on cancellation and early termination fees involving mobile phone contracts it was decided that these payments were further payments due under the contract and so had the same VAT status as other payments for goods and services made under the same contract. The changes to HMRC’s policy were set out in Revenue and Customs Brief 12 (2020).

There were two controversial aspects to the changes:

  1. It was clear that VAT would apply to a wide range of payments that had previously been regarded as compensation such as some payments for breach of contract and some payments for dilapidations.
  2. The change was retrospective; HMRC invited businesses to correct their VAT returns covering the previous four years for underdeclared VAT on income now regarded as taxable.

There were widespread objections from the tax profession and the business sectors severely affected by the change and in January 2021 HMRC suspended the application of Brief 12 (2020) so that representations from interested parties could be considered.

HMRC has now updated the guidance in its internal manuals and a new Revenue and Customs Brief 2 (2022) has been issued.

The changes will now take effect from 1 April 2022.  Early termination charges are now assumed to be further payments in consideration of the supply and so liable to VAT in the same way as the main supply.  Most charges for cancellation of a contract will also be brought within the scope of VAT.

One of the main changes from the original Brief is that payments for dilapidations will, in most circumstances, continue to be regarded as compensation and so outside the scope of VAT.

Further details of the circumstances in which these types of charge will be within the scope of VAT are set out in HMRC’s manuals at VATSC05910, VATSC05920, and VATSC05930.

All payments that are now liable to VAT as set out in HMRC’s guidance must be subject to VAT on or after 1 April 2022.  This includes payments on which a ruling had previously been obtained from HMRC.

Businesses that have always treated these payments as vatable, or who adopted this policy from September 2020, must not adjust their returns to treat the payments as outside the scope for periods before 1 April 2022.

However, businesses that have adjusted previous returns to account for VAT on payments that are outside the scope according to the revised guidance, or have been accounting for VAT on outside the scope payments may make an adjustment.

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