Tag Archives: HMRC-publication

VAT: New process to support repayment claims

By   14 November 2022
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HMRC has announced a useful new tool for speeding up repayment payments.

When a business submits a repayment return (when input tax exceeds output tax) HMRC may carry out a “pre-cred” (pre-credibility check) inspection or queries. This is to ensure that a claim is valid before money is released.

If not subject to a visit, a business is likely to be asked for information to support a claim. Such requests are more common if a business normally submits payment returns or it is a first return. The requested information is usually in the form of copy purchase invoices or import documentation.

Prior to the changes, HMRC sent a letter by snail mail and the information would also be returned by post. This was often subject to delays and “misunderstandings”.

From this month, HMRC has launched an online form so that a claimant, or an agent, can upload documents to support the claim via the Government Gateway. It is hoped that this will result in businesses receiving a repayment in shorter order.

HMRC require:

  • the VAT registration number
  • the CFSS reference number from the HMRC letter
  • details of the main business activities
  • the date the business began
  • the VAT rates that apply to sales
  • details of any VAT schemes
  • the detailed VAT account
  • the five highest value purchase invoices, and
  • any additional specific information requested by HMRC

Depending on circumstances, HMRC may also need:

  • bank statements
  • export sales invoices or supporting documents
  • import VAT documents
  • hire purchase or lease agreements
  • completion statements and proof of transfer of funds for the purchase of land or property
  • the planning reference and postcode of construction
  • sales invoices where non-standard VAT rates were charged

HMRC aim to look at this information within seven working days and will contact the claimant or agent when a decision is made, or if any further information is required.

Let us hope that speeds up the process.

VAT: How to avoid MTD penalties

By   15 June 2022
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HMRC has published a new Factsheet CC/FS69 which sets out compliance checks to be made to avoid penalties for Making Tax Digital (MTD).

Under MTD, VAT-registered businesses must keep certain records digitally and file their VAT returns using compatible software.

The Factsheet covers:

  • signing up to MTD – go to www.gov.uk and search for ‘VAT record keeping’. A business must have functional compatible software in place before you signing up
  • filing VAT return using functional compatible software. This needs to be able to record and store digital records, provide HMRC with information and VAT returns from the data held in those digital records, and receive information from HMRC
  • keep records digitally in an “electronic account” (all transactions must be contained in an electronic account but there is no need to scan paper records like invoices and receipts)
  • use digital links to transfer or exchange data
  • use the checking functions within the software (to ensure returns are correct before being filed)

Penalties

HMRC levy penalties for MTD for the following actions:

  • filing returns not using use functional compatible software. A penalty applies for every return filed in error
  • not keeping records digitally, a penalty applies for every day on which a business does not meet this requirement
  • not using digital links to transfer data between pieces of software, a penalty applies for every day on which a business does not meet this requirement
  • not signing up to MTD

These penalties apply in addition to existing penalties and interest charged for a range of misdemeanours from late returns to deliberate underdeclarations.

VAT: Trading with the EU from 1 January 2022

By   14 December 2021
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Further to my article on the new changes from next year, HMRC has published information on the rules of origin for trade between the UK and EU.

The Bulletin covers the rules of origin and the forthcoming changes to the requirement for supplier declarations to support proof of origin.

VAT: HMRC OSS updates

By   5 October 2021
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HMRC has issued two new documents which provide practical guidance for users of the One Stop Shop (OSS).

They cover how to pay the VAT due on an OSS return and how to use the service to submit an OSS VAT return if a business is registered for the OSS Union Scheme. A link has been added to allow a business to submit a OSS return directly.

New rules of origin for goods

By   27 April 2021
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Brexit update

HMRC has published updated, detailed guidance for the rules of origin for goods moving between the UK and EU.

It is important to understand the impact of the rules and how they impact a business. Specifically, to ensure advantage is taken of zero tariffs when dealing with cross-border goods. The rules apply to both imports and exports and clearly, incurring unnecessary tariffs is to be avoided if possible.

Background

The UK moved to trading based on a new Free Trade Agreement (FTA) – the Trade and Cooperation Agreement (TCA) between the UK and the EU post-Brexit.

To export tariff-free under the TCA, goods must meet the UK-EU preferential rules of origin. This means that there must be a qualifying level of processing in the country of export to access zero tariffs. This applies to EU origin goods imported and moving through the UK from a Member State to another EU Member State, as well as goods imported from the Rest of World.

These rules are set out in the TCA and determine the origin of goods based on where the products or materials (or inputs) used in their production come from. Their purpose is to ensure that preferential tariffs are only given to goods that originate in the UK or EU and not from third countries.

VAT: New HMRC guidance for using international post and merchandise in baggage

By   19 January 2021
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HMRC has published two new sets of guidance for international post users and importing merchandise in baggage. The changes are mainly due to Brexit.

International post users

HMRC has published new guidance for international post users.  

The notice explains what happens when a business imports or exports goods by post through Royal Mail or Parcelforce Worldwide.

The arrangements set out in the notice do not apply when a full declaration on a single administrative document (SAD – Form C88) is required.

The information about sending a package overseas has been updated. This relates to the new need to compete a customs declaration for goods sent to the EU.

Bringing commercial goods into Great Britain in baggage

The guidance covers commercial goods (also known as Merchandise in Baggage) which will be used, or sold by a business, where: 

  • a commercial transport operator does not carry them for a business
  • a person has travelled to GB carrying goods either:
    • in accompanied baggage
    • in a small vehicle that can carry up to no more than 9 people and weighing 3.5 tonnes or less

A person must declare all commercial goods. There is no duty-free allowance for goods brought into GB to sell or use in a business.

My guide to importing and exporting post Brexit here.

VAT stats

By   17 December 2020
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HMRC has published the official VAT statistics for 2019/20

The headlines are:

  • Total VAT receipts in 2019-20 decreased by 1.5% from the previous financial year. There was a downward impact on receipts from the VAT deferral measure which took effect from 20 March 2020.
  • The Wholesale and Retail sector continued to be the largest contributor to net home VAT liabilities.
  • 62% of total net home VAT declared was paid by traders with an annual turnover greater than £10 million.
  • Incorporated companies accounted for the largest share of the VAT population and annual taxable turnover. This group accounted for 72% of traders, and 91% of annual taxable turnover in 2019-20.
  • Sole proprietors were the second largest group in terms of VAT population; this group accounted for 16% of VAT traders. However, the annual taxable turnover declared by this group only accounted for 1% of the total for 2019-20.
  • The Professional, Scientific and technical activities sector increased by £860 million (5%), the largest year-on-year change.
  • The Real Estate Activities sector decreased by £530 million (12%) and the Construction sector decreased by £160 million (3%) year-on-year, although both sectors remain in the top ten sectors in terms of contribution to VAT liabilities.
  • 46.7% of traders declared annual turnover below the VAT registration threshold.
  • More than half of net home VAT payments are accounted for by traders in the top 0.5% in 2019-20.