Credit Where Credit’s Due

Credit Where Credit’s Due

CREDIT WHERE CREDIT’S DUE

This note explains HMRC’s new rules from 1 September 2019 for adjustments to VAT following increases or reductions in the price of goods or services.

Reason for the change

There is evidence that some businesses are trying to use the current Regulations to gain a tax advantage by making VAT adjustments for reductions in price without refunding their customers.

Under the new rules:

  • the time an increase in price occurs is when the change is agreed by both the supplier and the customer – a debit note must be issued no later than 14 days after the price increase – the supplier must account for the increase in VAT in the VAT period in which the change occurs
  • a decrease in price occurs when a supplier makes a refund to a customer, or other person entitled to receive the payment – a supplier has 14 days to issue a credit note from the time the decrease occurs – a supplier must account for the decrease in the VAT period in which it takes place – a VAT-registered customer must reduce the amount of VAT it has claimed by the same amount, this does not prevent a supplier issuing credit notes in advance of refunds being made, but ensures that it is issued no later than 14 days after the payment.

 A debit note must contain:

  • an identifying number, the date of issue
  • the name, address and registration number of the supplier
  • the name and address of the customer
  • the identifying number and date of issue of the VAT invoice or invoices relating to the supply for which there is an increase in price
  • a description sufficient to identify the goods or services supplied
  • the amount of the increase in price excluding VAT
  • the rate and the amount (expressed in sterling) of the VAT chargeable in respect of the increase in price

 A credit note must contain:

  • an identifying number, the date of issue
  • the name and address of the customer
  • the identifying number and date of issue of the VAT invoice or invoices relating to the supply for which there is a decrease in price
  • a description sufficient to identify the goods or services supplied
  • the amount of the decrease in price excluding VAT
  • the rate and the amount (expressed in sterling) of the VAT credited in respect of the decrease in price

How Can We Help

 At Hawsons we have many VAT services such VAT Registration, VAT Health Check, and VAT on property transactions and options to tax.

To find out about all our VAT services click here.

To contact us and book your free initial meeting click here.

 

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
Exporters Need to be Prepared for a Potential no Deal Brexit

Exporters Need to be Prepared for a Potential no Deal Brexit

Exporters need to be prepared for a potential no-deal Brexit

Deal or no-Deal

Exporters need to be prepared

If/When the UK leaves the EU, the rules on the shipment of goods will change. Shipping goods from the UK to EU member states will be known as exports rather than dispatches. It is possible that the UK will agree transitional arrangements with the EU in the next few weeks, so exporters should watch out for updates from the government. Therefore, in order to prepare for a no-deal Brexit scenario, exporters will need to take the following action:

  • Apply for an EORI number (Economic Operator Registration Identification). This will allow you to submit customs declaration forms, which you will need to import or export goods.

 

  • You must update your contracts to show that you are now an exporter.

 

  • To remove goods from the UK you will need to submit an export declaration form at the port of export, and you need to consider how you will do this. Exports will have to be reported to HMRC at the point of departure and they will need to clear Customs when they arrive at their destination.

 

HMRC has notified 88,000 VAT registered businesses to confirm they have been automatically enrolled for an EORI number. If the UK leave the EU with no-deal, an EORI number will be required to export or import goods from any country.

There are around 100,000 businesses not registered for VAT that are trading in the EU.  If the UK leave the EU on no-deal terms, these businesses will need to apply for an EORI number to continue trading in other EU countries – you can do that here. It takes 5 to 10 minutes to apply and you should receive your EORI number within at least 5 working days.

How can we help

At Hawsons we offer many VAT services such as, VAT registration, VAT Health check, and VAT on property transactions and options to tax. Over the past 12 months we have registered companies, sole proprietors and partnerships for VAT with HMRC. Using our expertise, we have advised clients whether to register for VAT voluntarily or if they are required to register due to their turnover. For more information on our VAT services click here

 

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
The Apprenticeship Levy Must be Changed

The Apprenticeship Levy Must be Changed

95% of manufacturers strongly believe that the Apprenticeship Levy needs to be altered to an employer-led system. Employers from the manufacturing industry are asking the government for an immediate rethink into the Apprenticeship Levy. This is to make access to funding more flexible so they can develop the crucial skills required for the future.

One of the main problems is the absence of suitable apprenticeship training standards (training course criteria) which is the ability for employers to provide the skills their business needs which is stopping companies from training the next generation of employees. This is due to companies not being able to use funding they receive through the Apprenticeship Levy on workforce training, as only 19% of the Levy paying companies actually spent all of their Levy last year.

Key Facts:

95% of manufacturers say the Apprenticeship Levy has to be altered to an employer led system.

One in five manufacturers want to scrap the Levy, and one in 5 wish for improvements to be made.

19% of Levy paying companies actually spent all their Levy last year.

 

Tim Thomas, director of Labour Market and Skills Policy at Make UK, commented: “The apprenticeship levy was rushed in development, hurried in implementation and has been caught ever since in systemic chop and change.

It’s little wonder then that manufacturers overwhelmingly want to see real change, not tinkering at the edges of a skills system that is just too slow, too complex and increasingly too late to deliver the skills needed by tomorrow’s technologies.”

 

More from our manufacturing experts

You can find all of our latest manufacturing sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Chris Hill

Senior Partner, Sheffield

0114 266 7141
Crypto assets Questions and Answers Article

Crypto assets Questions and Answers Article

  1. Has HM Revenue and Customs (“HMRC”) issued any guidance?

On 19th December 2018, HMRC released guidance on the taxation of crypto assets for individuals.  It is believed to be one of the most comprehensive sets of guidance currently issued by any government.  It can found at: https://www.gov.uk/government/publications/tax-on-cryptoassets

  1. How is an individual taxed?

Mining – subject to Income tax as miscellaneous income on discovery (not necessarily sale) ie tax rates up to 45%.  Future growth is normally Capital Gains Tax (“CGT”).

Investment – subject to Capital Gains Tax, tax rates typically 20%.  Losses can be used against other gains.

Trading – slightly unusual that HMRC would argue that an individual is trading and subject to Income Tax unless there were many transactions and there was a profit.  An individual might argue for trading if there were losses (to offset against income and gains) , but HMRC would argue against.  It follows all the usual badges of trade rules.

  1. What are the identification rules for CGT?

Similar to a disposal of shares ie

  • Same day transactions
  • 30 day rule
  • The section 104 pool

 

  1. How is a company taxed?

It depends on how it is treating the crypto assets in its accounts.  Following IFRS interpretations Committee guidance, it suggested IAS 2 (inventories) could apply (when held for sale in the ordinary course of business) or IAS 38 (intangible assets) could apply when held as an investment.  The corporate taxation should therefore follow as trading income or capital gains with rates of currently 19%.  However, any formal guidance/law has yet to be issued.

  1. How is an employee taxed on receipt?

If given by reason of employment it is a readily convertible asset in money’s worth.  In essence subject to PAYE (income Tax and NI – employment taxes) on receipt.

  1. Are crypto assets subject to Value Added Tax (“VAT”)?

They are recognised as akin to a financial product and currently not within the scope of VAT.

  1. Are there any tax “red herrings” or incorrect stories?

The following are in circulation, but not accepted by HMRC:

  • It is gambling so it is not taxable
  • It is a gain on money for personal use and is not taxable under CGT.
  • Exchanging one cryptocurrency for another (or a different type) does not give rise to a taxable event.

 

  1. Is HMRC on the offensive and seeking out non disclosure of income and gains?

Absolutely!  HMRC has sent letters to at least three popular cryptocurrency exchanges operating in the U.K., requesting client transaction data. These advance notices, which have been mailed to eToro, Coinbase and CEX.IO, will serve as precursors to a later statutory letter which will require more definitive action.

  1. What is the situs of a crypto asset for resident but non UK domiciled individuals?

With UK resident but non-UK domiciled individuals being subject Inheritance Tax on UK situs assets or potentially capital gains on the remittance basis.  This one is still open to interpretation or regulation.

If the crypto currency is treated as UK situs, then the downside for non UK resident and non UK domiciled individuals is that it could be subject to UK inheritance tax on death.  Yes the UK does want to tax foreigners! These individuals should consider company/trust structures to own UK assets.

  1. Is Crypto asset use regulated on unregulated?

The UK is fully supportive of Crypto assets and has appointed a Crypto assets Taskforce to understand and develop the market.  Their last report is dated October 2018 and can be found at https://www.gov.uk/government/publications/cryptoassets-taskforce

Crypto assets remain largely unregulated, but this may change from early 2020.

Other countries for example India and China do not support crypto assets and have made their use illegal.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

David Cairns

David Cairns

Tax Partner, Northampton

01604 645 600

[email protected]

A Decline in Manufacturing Output

A Decline in Manufacturing Output

According to the latest CBI (the Confederation of British Industry) Industrial Trends Survey, manufacturing output has decreased to a standstill in the three months leading up to June 2019. The total number of orders submitted in the manufacturing books has been the lowest since October 2016, and this has been the slowest growth since April 2016.

The decrease in the manufacturing output in the three months to June was mainly because of the 83% reduction in motor vehicle production. This has been the largest drop since the financial crisis.

On the other hand, the manufacturing output outside the motor vehicle area is looking much brighter. Ten out of the other sixteen sectors grew, mainly in areas such as chemicals and food, drink and tobacco sectors.

Key facts:

  • There has been 83% reduction in motor vehicle production.
  • Manufacturing has decreased to a standstill in the three months leading up until June 2019.
  • Manufacturing output outside motor vehicle is looking much brighter as ten out of the other sixteen sectors grew. (CBI)

Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council, said: “Manufacturers are proving highly resilient in the difficult circumstances they face, but these results are further evidence of how ongoing Brexit uncertainty is holding back growth in key industries.

“The first item in the new Prime Minister’s in-tray must be to quickly resolve the Brexit deadlock. We can then look forward to working with the new government to address long-term challenges and identify new opportunities to enhance productivity in the sector”.

More from our manufacturing experts

You can find all of our latest manufacturing sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Chris Hill

Senior Partner, Sheffield

0114 266 7141