Still not signed up for MTD VAT filing?
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Have you received a letter from HMRC about Making Tax Digital?

The majority of VAT-registered businesses with turnover above the VAT threshold were required to keep their records digitally for periods starting on or after 1 April 2019, sign-up to the service and submit their first quarterly return to HMRC direct from software by 7 August.

While under normal circumstances, non-compliant businesses could have expected a fine of up to £400 for digital tax foot-dragging, HMRC has stated that it will be taking “a light touch” to penalties in the first year of MTD.

The Revenue puts this softly-softly approach down to a wish to help businesses with the transition especially at a time when they are fully focused on preparations for leaving the EU.

HMRC will not issue filing or record keeping penalties where businesses are doing their best to comply. However, according to Revenue guidelines sanctions will remain in cases of “deliberate non-compliance” in order to “safeguard VAT revenue”.

Letters to Latecomers
Instead of penalties, HMRC is instead in the process of sending email reminders to businesses yet to register with the new programme. It will also send letters to those that missed the first filing deadline.

The letters will point latecomers to the MTD regime to HMRC’s customer service channels, including its webinars and online guidance, which can be found on GOV.UK, and walkthrough videos on YouTube.

Penalty Levels
While the tax authority confirmed back in February 2019 that it will be taking a light-touch approach to penalties during in the first year of Making Tax Digital, under the current regime penalty levels are linked to the gross turnover of a VAT-registered business and are laid out as follows:
  • Total Turnover = £22,800,001 and above then the maximum penalty is £400
  • Total Turnover = £5,600,001 to £22,800,000.99 then – £300
  • Total Turnover = £100,001 to £5,600,000.99 then - £200
  • Total Turnover = £100,000.99 and under then - £100
Businesses can sign up for MTD on GOV.UK. If paying by Direct Debit, businesses should sign up at least seven working days before a return is due. If not paying by Direct Debit, businesses should register at least 72 hours (three days) before their return is due.

If you have received a letter from HMRC regarding MTD and need help then contact us. Enjoy a friendly, jargon-free discussion without obligation. Call 01462 791079.

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VAT on Small Parcels
When you order goods online you don’t expect to pay any additional taxes when they are delivered. This is currently the case for goods ordered from a supplier in the UK or the EU.

However, if you order goods from outside the EU you may receive a notice saying you must pay the import VAT before the goods can be delivered. If the supplier has already charged you the import VAT, you should not have to pay it twice.

If the UK leaves the EU without other arrangements in place (no-deal Brexit), import VAT will be due on all parcels of goods worth no more than £135, which arrive in the UK from the EU or from other countries. If the parcel is a gift to the recipient no import VAT is payable, but the parcel must be clearly marked as a gift from an individual to another individual and must be intended for personal use.

The business which sends the parcel to the customer in the UK should register with HMRC and pay the import VAT, or arrange for the parcel operator to pay the VAT. The registration is required even if the goods are zero-rated for VAT.

If your business relies on goods sent as small parcels through the post, be aware of this change in the rules. If you are sending small parcels to non-business customers in other EU countries you may have to pay import VAT to those countries.
Tax Relief for Buildings
For years you have been able to claim tax relief for the cost of equipment installed within or on buildings, such as shop fittings, but not for the cost of the building itself. That changed from 29 October 2018.

You can now claim a Structures and Buildings Allowance (SBA), which is equal to 2% of the cost of acquiring or constructing a commercial building that is used for your business. You must incur the costs on or after 29 October 2018, and any construction contract must have been signed on or after that date.

You can claim the SBA on a range of costs including building, renovating, repairing, fitting out, site preparation and design. If you buy a newly constructed commercial building that should qualify, but in that case the SBA is calculated on the lower of the construction costs and what you paid for the whole building.

To make a claim for the SBA you need to have received an “allowance statement” for the building. The first business that uses the building creates the allowance statement and passes it on to the next user when the building is sold. An allowance statement is also needed for any new extensions or renovations completed for existing structures.

Your conveyancing solicitor should ask for the allowance statement as part of the deeds when you acquire a commercial building. You can’t claim the SBA on the costs of any residential properties, including buildings located in the grounds of a residence such as a home office. Properties used for furnished holiday lettings or for residential letting don’t qualify for the SBA.

Action: You should submit your SBA claim as part of your Corporation Tax return, or Income Tax return for an unincorporated business. We can help you do that, but don’t forget to tell us how much you have spent on any commercial buildings since 29 October 2018. 
Re-Enrolment in a Workplace Pension
For many employers, the aggravation of setting up auto-enrolment of staff into a workplace pension was over years ago, but it’s not a task that can be done once and forgotten.

All employees who opted out of the workplace pension must be re-enrolled in that pension after three years. You do this by writing to each staff member who should be re-enrolled within six weeks of the re-enrolment date.

You choose your own re-enrolment date, but it must fall within a six-month time frame based on the date you had to start auto-enrolment for the first time. Once you have re-enrolled all the employees to whom this rule applies, you must submit an online declaration of compliance to The Pensions Regulator within five months of the re-enrolment date. We can help you with that statement.

Those individuals who are automatically re-enrolled into the pension can immediately opt out again if they choose to do so. Individuals with very large pension pots may be advised to do this if they have taken steps to protect the level of their pensions’ lifetime allowance.

Get in touch - If you'd like to find out more about how we can help you and your business pay less tax, generate more profits and create long-term wealth for you and your family, please get in touch now