MAKING TAX DIGITAL: What you need to know

MAKING TAX DIGITAL: What you need to know

VAT registered businesses with a taxable turnover above the VAT threshold (£85,000) are now required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns for VAT periods that started on or after 1 April 2019.

The requirements do not apply to VAT registered businesses with taxable turnover below the VAT threshold (e.g. those that have registered voluntarily) and HMRC has announced a deferral to the start date, of 6 months, for some more complex businesses:

  • trusts
  • ‘not for profit’ organisations that are not companies (this includes some charities)
  • VAT divisions
  • VAT groups (the deferral applies to the group registration only and not to any group companies that are not covered by the group registration)
  • public sector entities that are required to provide additional information alongside their VAT return (such as Government departments and NHS Trusts)
  • local authorities and public corporations
  • traders based overseas
  • those required to make payments on account
  • annual accounting scheme users

Businesses and organisations within the scope of MTD for VAT, will have to keep digital records and submit VAT returns using functional compatible software from the start of their first VAT return period beginning on or after 1 April 2019, or 1 October 2019 if they are covered by the 6-month deferral mentioned above.

Functional compatible software – Here is an up to date list of software suppliers from HMRC.

https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-vat

Sign up for Making Tax Digital for VAT

Sign up for MTD at least 72 hours before a VAT Return is due, or 7 days before if your client pays by direct debit.

The deadlines and frequency of your VAT Returns and payments will not change.

After you’ve signed up, you cannot use VAT online services to send VAT Returns.

RECENT UPDATES FROM HMRC:

HMRC has received numerous calls from accountants whose clients receive large numbers of invoices from single suppliers,  such as builder’s merchants or drugs companies.    

VAT returns for those clients have historically been prepared based on the supplier statements ( often a monthly summary), rather than the individual invoices.   However, the concern until now has been that the MTD requirement relating to digital record keeping of supplies received required each supply received to be recorded individually.  

The good news is that HMRC have recently updated the MTD VAT Notice 700/22, and this point is now specifically covered in paragraph 4.3.3.1.   The update advises that while it remains HMRC’s view that best practice would be to digitally record the individual supplies, to manage risk of missed or duplicated entries,  they accept that additional work for a business in capturing individual supplies digitally could in itself lead to data entry errors.   On this basis, HMRC advise they can accept the recording of totals from a supplier statement where all the supplies on the statement relate to the same VAT period and the total VAT charged at each rate is shown. If a business does choose this option,  they are also required to cross-reference all supplies on the supplier statement to invoices received, but HMRC go on to confirm this can be done outside of the digital records.

https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat#digital-record-keeping

 

Tony Nickson is a VAT Consultant at the firm. He provides practical VAT advice to a wide range of clients in numerous business sectors and advises on matters relating to sole proprietors, partnerships and corporate bodies on all VAT issues including exporting, importing or providing goods/services within the UK. Please contact Tony on [email protected] or 0114 266 7141.

Free initial meeting

Tony Nickson

VAT Consultant, Sheffield

01604 645 600

Stamp Duty increase for non-residents could affect couples

ATT suggests couples ‘could be affected’ by an increase in stamp duty for non-residents

The Association of Taxation Technician (ATT) has warned that a planned increase to Stamp Duty Land Tax (SDLT) for non-UK residents may affect certain couples planning to buy a home.

The planned change that is outlined in a HMRC consultation, states non-UK residents buying a home in England or Northern Ireland will now be charged an extra 1% SDLT surcharge.

This change is thought to discourage purchases of property by foreign investors, as the Government believes these are causing an increase in house prices in the UK.

However, the ATT says it is concerned the changes may also impact couples where one lives or works abroad, but the other lives permanently in the UK.

As the surcharge would apply to joint purchases where at least one individual lives outside of the UK, couples in this situation who want to buy a home together or move house would be required to pay the extra charge.

Michael Steed, co-chair of ATT’s technical steering group, said this was “not in line with the policy aim of helping UK residents to get on the housing ladder”.

The Chartered Institute of Taxation (CIOT) also raised concerns about the proposed charge, arguing it would introduce further complexity to property taxes and cause more confusion for some homebuyers.

Brian Slater, chair of the CIOT’s property taxes sub-committee, said: “SDLT has been the subject of technical change in virtually every year since its introduction in 2003. We urge the Government to refrain from making further changes before the impact of recent changes to the taxation of residential property are assessed.”

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SRA Anti-Money Laundering Review

A recent review conducted by the Solicitors Regulation Authority (SRA) found that, in the SRA’s views, a significant amount of law firms are not doing enough to prevent money laundering. 

The review of 59 practices did not highlight any evidence of actual money laundering or any intention of money laundering. However, the concern is that the review found breaches of the 2017 Money Laundering Regulations as well as poor training and process control

The first area of concern that the review presented were issues around customer due diligence. The SRA found that almost a quarter (14) of the firms had inadequate processes to manage the risk around Politically Exposed Persons (PEPs).

However, the review showed that the largest concern was over a third (24) of the firm’s reviewed did not have a risk assessment that meets the requirements of the legislation, with four of the firms not having a risk assessment at all.

The review resulted in the SRA putting 26 out of the 59 firms into its disciplinary process and have started a wider review of 400 other firms. This wider review will be led by the new anti-money laundering unit that has been set up to strengthen resources to find and prevent money laundering.

Paul Philip, SRA Chief Executive, said: “Money laundering damages society, supporting terrorists, drug dealers and people traffickers. The stakes are too high for solicitors to be anything but fully committed to preventing money laundering and the crime it supports. Most solicitors take their responsibilities seriously, but too many firms are falling short. Those firms should be on notice that compliance is not optional. They need to improve swiftly. Where we have serious concerns that a firm could be enabling money laundering, we will take strong action.”

Read the full review here: https://www.sra.org.uk/sra/how-we-work/reports/aml-thematic-review.page

 

 

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