Changes to VAT penalty regime delayed until 2023

Changes to VAT penalty regime delayed until 2023

The government has announced that the new penalty regime for VAT, which was due to be introduced from 1 April 2022, will now be delayed until January 2023.

The delay is to provide HMRC with extra time to ensure their IT systems are ready and well tested. The new scheme will reform the penalty regime for late submission of VAT returns and late payment of VAT.

Under the new regime, HMRC will issue a single penalty point for each late submission of a VAT return and once a business has exceeded a points threshold for multiple missed returns, a flat penalty of £200 will be charged.

There will also be penalties for late payments. The first charge will be imposed at 2% of the outstanding tax if the tax due on a return remains unpaid 15 days after its due date. After 30 days the penalty increases to 4%. The second late payment penalty is a daily penalty (set at 4% per year of the tax still outstanding at that point), starting from 31 days after the due date until the business pays the tax that is due. Late payment interest will be calculated at 2.5% above the Bank of England rate and will be payable on tax outstanding after the due date.

 

How can we help?

At Hawsons we provide a range of VAT services. 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.

VAT on services is a complicated area. VAT rates may or may not apply depending on who is providing or buying them, where they are provided and the precise nature of the services provided.

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

Craig Walker

Tax Director, Sheffield

0114 266 7141

Tony Nickson

VAT Consultant, Sheffield

01604 645 600

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Legal Sector Salaries Set to Climb in 2022

Legal Sector Salaries Set to Climb in 2022

It’s no secret that many sectors are facing severe wage inflation with many locked in ongoing battles to retain their best staff. Indeed, as the economy begins to open up as Omicron-related restrictions are eased, many legal firms in particular are facing a backlog of demand for services which were delayed during the pandemic. A recent survey by recruitment consultancy firm Robert Walters found that many in the professional services sector are planning to increase their pay rise budget by 10-15% in 2022. These sort of levels have only been seen in recent times when inflation has been much higher than currently reported.

 

New hires receive increased salary offers

The current success of the Covid-19 vaccine programme and the gradual easing of restrictions in 2021 had an understandably positive effect on business confidence. However, as demand for services increases, a shortage of candidates combined with bottled-up demand for people and renewed investment now means a power shift towards candidates as firms work even harder to convince the best talent to join them. Inevitably that has meant an increase in salary offers which can have a domino effect on existing pay structures.

 

Existing employees also set for pay rises

Whilst new employees are seeing increased salary offers to convince them to join, many existing employees’ salaries have not increased as rapidly over the past 12-18 months. However, this is expected to change throughout 2022 at most levels with some significant increases expected. Recent reports have also found that existing staff are being put under increasing pressure due to staff shortages which can lead to time off work or even looking for alternate opportunities, compounding the issue.

 

What do professional staff look for?

Over the past two years, the main questions potential joiners want answered center around remote working, flexible working arrangements, holiday entitlement, and compensation. In professional services, the trend has been toward compensation packages, especially in the past 6-12 months where many recruits take the ability to remote work and flexible hours as expected, especially in the legal sector where many roles can be done through a combination of on-site and off-site working.

 

How can we help?

At Hawsons we have a dedicated team of solicitor accountants at our offices in Sheffield, Doncaster, and Northampton.  We act for a large number of law firms across all three of our offices and offer a wide range of services which are tailored to meet their individual needs. Our legal client base consists of a multitude of firms of varying structure and size, from sole traders to limited companies and LLPs with corporate members.

Our understanding of the unique issues that many in the sector are facing, combined with our technical experience, allows our solicitor specialists to provide you with proactive, commercial and informed accountancy and tax advice.

More from our legal sector experts

You can find all of our latest legal 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

Simon Bladen

Partner, Sheffield

0114 266 7141

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SRA seeks greater fining power

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UK manufacturers positive about 2022 despite challenges

UK manufacturers positive about 2022 despite challenges

A recent industry survey has shown that many UK manufacturers are optimistic that productivity and business conditions will improve in 2022. Despite the fact that many UK manufacturers will be facing many challenges such as:

  • Retaining staff
  • Inflation
  • Rising input costs
  • New importing and exporting rules regarding Brexit

The industry survey conducted by trade body Make UK and PwC found that 73% of UK manufacturers believe that conditions for the manufacturing sector would improve in 2022. Furthermore, 78% foresaw at least a moderate increase in productivity. It is important to note that the survey was carried out in November 2021. So ahead of the latest Omicron variant.

Despite UK manufacturers having a positive outlook for 2022, there are still many challenges the sector will face over the coming year.

 

Challenges for UK manufacturers in 2022

Recruitment

One of the main challenges, UK manufacturers will face in 2022 is retaining and recruiting staff with key skills and talent. In the current climate, this seems to be a challenge for most industries. A recent survey of HR leaders across a variety of business sectors has found that 77% of employers are struggling with recruiting and retaining employees. The most common reasons for employees leaving their roles were because they found better pay at another firm (76%) and a perceived lack of career opportunities at their current organisation (64%). With unemployment rates currently low, the power has swayed towards employees as companies now look to make improvements such as flexible and remote working to make their organisation more appealing to potential employees.

 

Overseas demand affected

Due to the new strict rules that came into force on 1 January 2022, the process of importing and exporting goods is now slower, more expensive, and less flexible. In addition to this, UK manufacturers believe that logistics issues and the uncertain situation regarding pandemic and possible restrictions have damaged export demand. International orders for British-made manufactured goods are down for the fourth month in a row. This decrease in demand overseas will be a concern for manufacturers over the coming year.

 

Supply Chain issues 

Importing goods from other countries will also be a challenge for UK manufacturers as new rules now mean that importers must make a full declaration on goods entering the UK from the EU or other countries. Traders can no longer delay this for 175 days. Furthermore, there will now be additional costs of around £300-£400 for importing each consignment into the UK. Therefore, manufacturers will need to rethink how they import goods cost-efficiently.

 

Despite these challenges, Make UK forecast growth of 3.3% for the manufacturing sector in 2022.

 

How can we help?

At Hawsons we have a dedicated team of manufacturing and engineering accountants at our offices in Sheffield, Doncaster, and Northampton. Our specialist team offers a wide range of services which are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.

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

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Rail fares due to increase in March by 3.8%

Rail fares due to increase in March by 3.8%

Rail fares increase in line with July’s RPI inflation rate

The government has confirmed that rail fares across England are due to increase by 3.8% in March 2022. This is the largest increase in rail fares within the last nine years with the increase being in line with July’s RPI inflation rate. However, this increase is less than many feared as rail fares increased by more than RPI inflation rate in March 2021.

 

Will the rail fare price increase result in fewer passengers?

Due to the pandemic, an increasing amount of people are now working from home, especially those that are in the commuter belt who will often use the train to travel to nearby cities for work.

This additional price increase is likely to result in fewer people using the train than in previous years. Industry leaders have suggested a freeze in rail fare prices in an attempt to get more passengers back on the railway. But, due to the new Omicron variant of Covid-19 passenger numbers are now falling again after a peak in November 2021 at around 70% of the pre-pandemic levels.

 

Treasury keen to reduce subsidy in rail

The government has invested over £14bn into rail services during the pandemic in order to keep rail services running. They have said that this fare increase would contribute towards meeting some of these costs. The rail minister Chris Heaton Harris has said that keeping rail fares in line with inflation strikes a fair balance.

The increase will be officially applied to regulated fares in England alone. However, it is likely that it will be reflected throughout the UK. Shadow transport secretary, Louise Haigh, has said that families who are already facing increasing taxes and bills will now be hit with a large increase to their daily commute costs which people may not be able to afford.

Others have also criticised the move as Paul Tuohy chief executive of Campaign for Better Transport has said that rail should be made as the affordable choice if the government is serious about reducing transport’s carbon footprint and believes rail fares should have been frozen to match the fuel duty freeze for cars.

 

How can we help?

At Hawsons we have a dedicated team of Transport and Logistics accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

More from our transport and logistics experts

You can find all of our latest transport and logistics 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.

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HMRC give self-assessment taxpayers one month waiver

HMRC give self-assessment taxpayers one month waiver

HMRC have announced that they will be waiving late filing and late payment penalties by one month for Self-Assessment taxpayers. This is to give them additional time to complete their 2020/21 tax return and pay any due tax if needed.

However, HMRC are still encouraging Self-Assessment tax payers to file and pay on time if they can. The department have announced that out of the 12.2 million people that need to submit a Self-Assessment tax return by 31 January 2022 nearly 6.5 million have already submitted.

HMRC have said that with Covid-19 affecting the capacity of some tax-payers and their agents it is making it increasingly difficult for taxpayers to meet the 31 January deadline. Therefore, HMRC have made the decision to implement a one-month waiver for late filing and late payment penalties.

This is a very welcome concession.

 

What are the new rules for self-assessment taxpayers?

The official deadline for filing and paying your tax return remains as 31 January 2022. The waiver implemented by HMRC will have two fundamental changes:

  • Firstly, anyone who cannot file their tax return by the 31 January deadline will not receive a late filing penalty if they file online by 28 February. Technically the return will have been filed late but the tax-payer will be treated as if they had a reasonable excuse and so the automatic £100 penalty will not be charged.
  • Secondly, anyone who cannot pay their Self-Assessment tax bill by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a Time to Pay arrangement, before 1 April.

 

However, it is important to note that interest will be charged with effect from 1 February 2022 for those that miss the 31 January deadline. Therefore, we recommend that you pay on time to avoid any interest payments if you can.

 

How can we help?

If you have any questions about the contents of this article, please contact one of our tax experts who will be able to assist you with any queries you may have.

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

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

David Cairns

Tax Partner, Northampton

01604 645 600

Aaron Hemmington

Tax Partner, Northampton

01604 645 600

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