8ed5f6c3 d616 4b12 8da4 893530d1265e 800x380 - HMRC’s new penalty regime

HMRC’s new penalty regime

HMRC’s new points-based penalty regime for late submission and payment will start from 1 April 2022. The changes will apply in the first instance to the submission of VAT returns for VAT return periods beginning on or after 1 April 2022. 

The penalty regime will then be extended to Making Tax Digital (MTD) Income Tax Self-Assessment (ITSA) accounting periods beginning on or after 6 April 2023. This will be in tandem with the extension of MTD (from the same date) for taxpayers with business or property income over £10,000 annually. The penalty scheme will be extended to all other ITSA taxpayers for accounting periods beginning on or after for 6 April 2024.

Under the new regime, taxpayers will incur a penalty point for each missed submission deadline. At a certain threshold of points, a financial penalty of £200 will be charged and the taxpayer will be notified. The threshold varies depending on the required submission frequency (monthly, quarterly, annual). The penalty points will apply separately to VAT and ITSA. The penalty points will be reset to zero following a period of compliance by the taxpayer. There are also time limits after which a point cannot be levied. 

In addition, the new system will see the introduction of two new late payment penalties. A first penalty of 2% of the unpaid tax that remains outstanding 15 days after the due date. The penalty increases to 4% of any tax still outstanding after 30 days. An additional or second penalty at a penalty rate of 4% per annum will accrue on a daily basis after 30 days. This additional penalty will stop accruing when the taxpayer pays the tax that is due.

There will be an appeals mechanism for both the late submission and late payment penalties available through an internal HMRC review process and an appeal to the First Tier Tax Tribunal.

Source: HM Revenue & Customs Wed, 14 Apr 2021 00:00:00 +0100
fae8c5a5 45e4 4063 8b0a 0deb455d9f81 800x380 - Archiving international trade documents

Archiving international trade documents

There are important rules that all businesses must follow to keep business and accounting records accessible if requested by HMRC. The exact documentation that must be held and the time limits for doing so can vary significantly. For example, most company records must be held for at least 6 years from the end of the last company financial year they relate to and even longer in some circumstances. Significant penalties can be imposed for failing to keep records or if records are inadequate.

These record keeping requirement include international trade documents.

HMRC publishes specific guidance concerning archiving international trade documents. This includes ensuring that your records are up to date and accurate, are legible, readily accessible and available for inspection at all reasonable times.

HRMC’s guidance states that the archiving period for your records will vary according to the individual procedure. However, in the event of a criminal investigation, traders’ records dating back ten years may be used as evidence. Accordingly, you may decide to retain documents for that length of time. After the date of entry, you can keep your records on a computer.

If these record keeping requirements cause storage issues or undue expense, then HMRC may allow you to reduce the length of time for storing documents.

Source: HM Revenue & Customs Wed, 07 Apr 2021 00:00:00 +0100
d85c0cb7 7c70 46ce b23a 7ff9c9bdd93a 800x380 - Simplified export declarations

Simplified export declarations

Following the end of the Brexit transition period, businesses need to make customs declarations when exporting goods to the EU as well as to the rest of the world. Businesses can make customs declarations themselves or hire a third party such as a courier, freight forwarder or customs agent.

Businesses can use simplified export declarations to help export most goods. The use of simplified export declarations allows businesses to export goods out of the UK by providing basic details to HMRC. This is usually done electronically. Once the goods for export are cleared, they can then be exported without needing to present any supporting documents.

To use simplified declarations for exports, authorisation is required from HMRC. If you are thinking of applying you need to:

  • have a good customs compliance record, including VAT returns and duty deferments
  • have a regular pattern of customs declarations against their Economic Operator Registration Identification (EORI) number
  • show how they will record all declarations for no less than four years after their submission date
  • have access to the Customs Handling of Import and Export Freight (CHIEF) system. The Customs Declaration Service will eventually replace CHIEF.

Businesses are still required to complete a more detailed customs declaration known as a supplementary declaration, but this can be done at a later point in time.

Source: HM Revenue & Customs Wed, 17 Feb 2021 00:00:00 +0100
9852b0d2 2a94 4c8e 8b02 a2c61e794102 800x380 - Tax and duties for goods sent from abroad

Tax and duties for goods sent from abroad

Following the end of the Brexit transition period new rules regarding tax and duty apply to goods sent to the UK from the EU. These changes are to ensure that goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT free imports. 

For goods sold directly to customers in the UK from overseas with a value of £135 or less (which aligns with the threshold for customs duty liability) the point at which VAT is collected has moved from the point of importation to the point of sale. 

Online marketplaces that are involved in facilitating the sale are responsible for collecting and accounting for the VAT. Business to business sales not exceeding £135 in value will also be subject to the new rules, but VAT can be accounted for by way of the reverse charge process.

In addition, from 1 January 2021, low value consignment relief (LVCR), which was an import VAT exemption for goods valued at £15 or less, has been removed. 

Normal VAT and customs rules on consignments valued at more than £135 will apply on the import of goods into Great Britain from outside the UK or into Northern Ireland from outside the UK and EU.

There are different rules if you sell goods to Northern Ireland from the EU or move goods between Northern Ireland and the EU.

Source: HM Revenue & Customs Wed, 13 Jan 2021 00:00:00 +0100
e8ae59ff 0beb 4d4e 995c 7cc3727d821c 800x380 - Could the Trader Support Service help your business?

Could the Trader Support Service help your business?

The new Trader Support Service has been designed to help businesses moving goods under the Northern Ireland Protocol from 1 January 2021, after the Brexit transition period comes to an end. There will be changes in moving goods between Great Britain and Northern Ireland whether or not a Free Trade Deal is reached.

If your business is moving goods between Great Britain and Northern Ireland or bringing goods into Northern Ireland from outside the UK then you need to be prepared. It is vitally important that you consider how you will move goods in and out of Northern Ireland after 1 January 2021. Under the Northern Ireland Protocol, all Northern Ireland businesses will continue to have unfettered access to the whole UK market. 

Since the Trader Support Service, backed by up to £200 million of UK government funding, was launched more than 7,000 businesses have signed up. A new contact centre has also been opened to support businesses with the registration process. 

The Trader Support Service:

  • will complete digital processes on behalf of all businesses moving goods into Northern Ireland under the Northern Ireland Protocol;
  • remove the need to purchase specialist software;
  • saves traders significant time in completing declarations;
  • reduces traders’ declaration costs as the service is free-to-use.

Businesses who sign up for the service will receive full guidance and support on the next steps to take as the 1 January 2021 approaches. This includes online training sessions and webinars to help give businesses the skills and expertise they need to ensure their Great Britain / Northern Ireland trade continues to operate smoothly.

Source: HM Revenue & Customs Wed, 09 Dec 2020 00:00:00 +0100
4de97e66 a147 4c96 a745 d5b34ba0c88e 800x380 - Registration of partnerships with HMRC

Registration of partnerships with HMRC

A Partnership is a relatively simple way for two or more persons (or legal entities) to set up and run a business together with a view to profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership.

There are two main types of partnership, a conventional one with two or more partners in the business. There is also a limited liability partnership or LLP, this more complex structure provides partners with the protection of limited liability, as afforded by a limited company.

In order to register a partnership with HMRC, the following forms need to be completed (where applicable):

  • Form SA400 – Registering a partnership for Self-Assessment
  • Form SA401 – Registering a partner for Self-Assessment and Class 2 NICs
  • Form SA402 – Registering a limited company, trust or another partnership as a partner

The registration forms should be filed with HMRC within six months of the end of the tax year the partnership commenced.

LLP’s are automatically registered with HMRC upon registering with Companies House, which is mandatory for these types of partnership. This means that there is no need to need to submit Form SA400. However, it is important that details of the partners are filed with HMRC using Forms SA401 and/or SA402.

HMRC should also be notified when new partners join an existing partnership, using forms SA401 or SA402. 

Source: HM Revenue & Customs Wed, 04 Nov 2020 00:00:00 +0100
8e8f1d2c 9dc4 41c3 bdc4 0cda2808ef2e 800x380 - Brexit countdown importers

Brexit countdown importers

As we have reported previously, the UK government has confirmed that it will neither accept nor seek any extension to the Brexit transition period which expires on 31 December 2020. The EU has formally accepted this position. This means that the process for importing goods from the EU will change from 1 January 2021.

HMRC has published guidance to help those importing goods to prepare.

Some important points to bear in mind from 1 January 2021 are as follows:

  • You will need to make customs declarations when you import goods from the EU. These rules currently apply to importing goods from the rest of the world, including Switzerland, Norway, Iceland and Liechtenstein.
  • You will need to make customs declarations when you import goods from the EU.
  • The rules for importing some types of goods will change.
  • You will need an EORI number that starts with GB to import goods.
  • You will need to pay customs duties and VAT on all imports.
  • You will need to make customs declarations when you import goods from the EU. Under certain circumstances, it will be possible to delay making a declaration for up to 6 months after you imported the goods.

Note, this guidance applies to England, Wales and Scotland. Separate guidance on moving goods into, out of and through Northern Ireland is expected to be published shortly.

Source: HM Revenue & Customs Wed, 21 Oct 2020 00:00:00 +0100
cbd836ed c919 41e6 8227 8463d2d37c0d 800x380 - Brexit countdown exporters

Brexit countdown exporters

The Brexit transition period is due to end on 31 December 2020 and this means that the process for exporting goods to the EU will change from 1 January 2021.

Current guidance published by HMRC states that from 1 January 2021, businesses will need to make customs declarations when exporting goods to the EU. This is what you currently have to do if exporting goods to any country outside of the EU, including Switzerland, Norway, Iceland and Liechtenstein.

Businesses, especially those that currently only trade with EU should be making the necessary preparations for how they will trade with the EU next year. Businesses can make customs declarations themselves or hire a third party such as a courier, freight forwarder or customs agent to do the paperwork.

HMRC has published guidance to help those exporting goods to prepare.

Some important points to bear in mind from 1 January 2021 are as follows:

  • Make sure you have an EORI number that starts with GB. You will need an Economic Operator Registration and Identification (EORI) number starting with GB to import/export goods from 1 January 2021.
  • Check the rules for your type of goods. For example, check what import/export licences or certificates you need, check the labelling and marketing standards for food, plant seeds and manufactured goods and check the rules for importing/exporting alcohol, tobacco and certain oils.
  • Find out if you can charge VAT at 0% on goods exported to the EU.
  • Check if the EU business you're exporting to is ready. The EU business importing your goods will also need to prepare for 1 January 2021 changes.

Note, this guidance applies to England, Wales and Scotland. Separate guidance on moving goods into, out of and through Northern Ireland is expected to be published shortly.

Source: HM Revenue & Customs Wed, 21 Oct 2020 00:00:00 +0100
f9fc6fff f1fc 41b1 b86f 3477a3ff5258 800x380 - Distributions in anticipation of striking off rules

Distributions in anticipation of striking off rules

The Extra Statutory Concession (ESC) – C16 was a well-used extra-statutory concession that allowed company directors to treat final distributions as a capital disposal and close down their business in an efficient manner. ESC C16 was withdrawn in March 2012 and replaced by s1030A Corporation Tax Act 2010 (CTA 2010) provisions.

This move meant that from 1 March 2012, the concessionary treatment provided by ESC C16 were replaced by more restrictive statutory rules which included the introduction of a new £25,000 threshold.

Under the legislation, distributions made in anticipation of dissolution under the striking off process will not be taxed as ‘income’ distributions provided:

  • at the time of the distribution, the company has secured, or intends to secure, payment of debts due to it, and similarly has satisfied, or intends to satisfy, debts due from it, and
  • the amount of the distribution, or total amount of distributions if more than one, does not exceed £25,000.

Directors with more than £25,000 of reserves will not be able to treat the final distributions as a capital disposal but rather as ‘income’ distributions.

Source: HM Revenue & Customs Wed, 21 Oct 2020 00:00:00 +0100
4e48e9c6 b55a 4f00 90d6 228c490f6be3 800x380 - New Freeports to cope with Brexit

New Freeports to cope with Brexit

The government is moving ahead with plans to build free trade zones – known as Freeports – across Britain after Brexit. Freeports are a special kind of port where normal tax and customs rules do not apply. In their place, simplified customs procedures and duty suspensions on goods applies. 

The initiative would allow firms to import components and other pre-manufactured goods into a Freeport without paying taxes. The goods would then be processed into a finished product to be built in the UK. In these new Freeport areas, no duties would be charged on goods or materials until they leave the zone as a finished product for the UK domestic market. There should be no UK tariffs payable when the finished product is re-exported directly from the Freeport.

The Freeport bidding process in England is expected to open before the end of the year and the first Freeports on track to be open by the end of 2021. In this opening series of applications, sea, air and rail ports in England will be invited to bid for Freeport status.

The Chancellor of the Exchequer, Rishi Sunak, said: “Our new freeports will create national hubs for trade, innovation and commerce, regenerating communities across the UK and supporting jobs.

The government is also working with the devolved administrations to establish at least one Freeport in each nation of the UK and will introduce a package of tax reliefs for business investment in the Freeports. This will include speeding up the planning process to accelerate development. We are also told there will be new initiatives to encourage innovators to generate new ideas to create additional economic growth and jobs. 

Source: HM Revenue & Customs Wed, 14 Oct 2020 00:00:00 +0100