The extended deadline for 2019/20 self-assessment tax returns of 28 February 2021 is approaching. We are hopefully working with all of you who are still yet to file your tax return but do let us know if you think this is not the case.
As a reminder, the tax liability for the 2019/20 tax year was still due by 31 January 2021, even though the filing deadline was extended to 28 February. Any outstanding tax may be subject to a penalty of 5% of the amount due if it is not paid within 30 days of the 31 January 2021.
Covid-19 Support: Additional Restrictions Grants
In recent days a number of local authorities have issued confirmation that the application for Phase 2 of the Additional Restrictions Grant (ARG) has been opened – this is for businesses affected by the enforced closure during the lockdown period, but also could apply to those adversely affected even if not forcibly closed. See the following links for more information:
Deferred VAT – arrangements for paying
If you deferred VAT payments due between 20 March and 30 June 2020 and still have payments to make, you can:
- pay the deferred VAT in full, on or before 31 March 2021
- join the VAT deferral new payment scheme – the online service is open between 23 February and 21 June 2021
- contact HMRC by phone on 0800 024 1222 by 30 June if you need extra help to pay
You may be charged interest or a penalty if you do not:
- pay the deferred VAT in full by 31 March 2021
- opt into the new payment scheme by 21 June 2021
- agree extra help to pay with HMRC by 30 June 2021
The VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021.
The new scheme lets you:
- pay your deferred VAT in equal instalments, interest free
- choose the number of instalments, from 2 to 11 (depending on when you join)
To use the online service, you must:
- join the scheme through your Government Gateway
- still have deferred VAT to pay
- be up to date with your VAT returns
- join by 21 June 2021
- pay the first instalment when you join
- pay your instalments by Direct Debit
Please let us know if you need any help with the above.
VAT – changes for businesses selling directly to consumers in the EU
Brexit has of course brought about various changes for businesses who trade with the EU and will continue to do so. One key area of change is for businesses selling directly to consumers in EU countries. Prior to 1 January 2021, when a UK business supplied goods to individual consumers within the EU there was a requirement for UK VAT to be charged until the value of the goods sold to an individual country exceeded the distance selling threshold, at which point a requirement to register for VAT in that country arose.
From 1 July 2021, the EU is removing the distance selling thresholds and in turn introducing new systems to prevent the need for multiple EU VAT registrations, however UK businesses will no longer be able to benefit from the distance selling thresholds from 1 January 2021, meaning a UK business selling goods to EU non-business customers must take a decision on what to do between 1 January 2021 and 1 July 2021, and then implement a plan for 1 July 2021 onwards.
If these changes affect your business then please get in touch if you would like some advice on the options available before and after 1 July 2021.
Kickstart Scheme – removal of minimum placement criteria
Employers no longer need a minimum of 30 job placements to access the government’s Kickstart Scheme, enabling SMEs to apply directly. But businesses can still use gateways to simplify the process, with ICAEW developing its own member portal.
Announced by Rishi Sunak in summer 2020, the Kickstart Scheme grant provides funding to create new job placements for 16 to 24-year-olds on Universal Credit.
The employer initiative, run by the Department for Work and Pensions (DWP), will create six-month paid work placements for young people at risk of long-term unemployment as a result of the pandemic.
Previously, companies were required to have a minimum of 30 job placements in order to access the scheme – a requirement which excluded many small businesses from applying directly. Gateway organisations such as ICAEW could pull 30 people together from different companies in one application, enabling smaller firms to apply.
However, as of 3 February 2021, the cap of 30 placements has been scrapped, allowing businesses to apply online or continue to get help from a Kickstart gateway already working with the scheme.
Please let us know if this is something your business can benefit from. We should be able to direct you to the right place.
VAT Reverse Charge Scheme for CIS
The long-awaited CIS VAT domestic reverse charge measure will apply to supplies of construction work from 1 March 2021. The measure was due to commence in October 2019 and has been delayed twice due to Brexit and the Coronavirus.
When the reverse charge applies the customer accounts for the supplier’s output VAT.
This measure only applies to construction supplies made by a business to another business.
Apply the reverse charge when all the following are met:
- The supply for VAT consists of construction services and materials.
- It is made at a standard or reduced-rate of VAT.
- Between a UK VAT registered supplier and UK VAT registered customer.
- Supplier and customer are registered for CIS.
- The customer intends to make an ongoing supply of construction services to another party.
- The supplier and customer are not connected.
The CIS reverse charge does not apply to any of the following supplies:
- Supplies of VAT exempt building and construction services.
- Supplies that are not covered by the CIS, unless linked to such a supply.
- Supplies of staff or workers.
The CIS reverse charge does not apply to taxable supplies made to the following customers:
- A non-VAT registered customer.
- ‘End Users’ i.e. a VAT registered customer who is not intending to make further on-going supplies of construction.
- ‘Intermediary suppliers’ who are connected e.g. a landlord and his tenant or two companies in the same group.
In preparation, businesses in scope for this change will need to identify the customers to whom this will be relevant and make sure that their invoicing is set up to be able to apply the reverse charge. Let us know if you would like any guidance on whether this applies to you and how to prepare.
The government will publish the Budget on Wednesday 3 March 2021 and is expected to set out the next phase of the plan to tackle the impact of Covid-19 and protect jobs. We will keep you up to date with all the key updates from this.