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HMRC

A Change In VAT Charges As A Result Of Brexit | VAT Help Brexit | VAT Advice
A change in VAT charges as a result of Brexit 758 513 Stepping Stones Accountancy

A change in VAT charges as a result of Brexit

As we prepare for the impact of Brexit, our European Union customers could be entitled to some VAT-free services.

Any business that is expecting their taxable supplies to be less than £83,000 (which is the deregistration threshold) for 2021 can deregister from VAT on 31st December 2020. Alongside this there are other scenarios of non-chargeable VAT.

If you are a business supplying to a consumer (B2C) that is a resident outside of the EU then no VAT needs to be charged. As an example, if you provide accountancy services to an EU country then prices will need to include the 20% VAT but if the customer is outside the EU (for example in Johannesburg) then no VAT is charged. 

As of 1st January 2021, legislation is being changed so that services provided to customers who are not in the UK, but who still remain in the EU, will not be charged VAT. This means that outside of the UK no VAT charges will apply for the direct business sales of items to consumers. Full details can be found via this link – https://www.legislation.gov.uk/ukpga/1994/23/schedule/4A.   

Although companies can deregister for the VAT scheme if they will be solely working with clients outside of the UK, it is their choice, and they can still remain part of the scheme. This then means that any work within the UK which they receive from a supplier, classed as input tax, enables them to claim back as UK expenses.

In summary the new regulations coming in to force on 1st January 2021 will provide some VAT saving opportunities for UK suppliers of business-2-consumer products dealing with any company outside of the UK. The key benefit will be a decrease in tax yield from the HMRC.

If you have any questions or need some help in regard to VAT charges please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

VAT Reverse Charges for Construction Industry | Help with VAT Reverse Charges | Vat Advice for CIS | Construction Industry Scheme Advice Bristol
VAT Reverse Charges for Construction Industry 758 513 Stepping Stones Accountancy

VAT Reverse Charges for Construction Industry

Individuals operating in the Construction Industry need to be aware that from the 1st March 2021 there will be a change in how VAT will be handled. Originally these changes were due to start in October 2019, but they were delayed initially due to Brexit and then subsequently by the Coronavirus pandemic.

The VAT domestic reverse charges for the construction services is, in essence, an extension to the Construction Industry Scheme (CIS). It will apply to any business transactions between VAT registered contractors and sub-contractors that have to be submitted under CIS.

Reverse charges will apply when:

  • VAT is charged in regard to construction services and materials
  • VAT is paid at a standard or reduced rate
  • A UK project is initiated between a VAT registered supplier and a VAT registered customer
  • Both the supplier and customer are registered for CIS
  • Neither the supplier nor the customer is connected in any way

According to the HMRC, they have introduced this initiative to help combat fraud. There have been many cases where construction businesses charge VAT and then decide to stop trading which ultimately means that they take with them between 5% to 20% of additional profit due to the VAT that they have charged.

Ultimately, as with any change of this nature, a business will need to make some significant changes:

  • Staff will need extra training to recognise CIS projects
  • All accountancy and bookkeeping practices will need to be updated to account for the changes in invoicing and reporting obligations
  • The VAT Flat Rate Scheme can no longer be utilised
  • No cash payments can be accepted
  • The cashflow needs of a business will change and consideration might be needed to file monthly returns

In summary, the construction activities that VAT reverse charges apply to are:

  • A building or structure project that has some form of construction work which includes alterations, repairs, extensions or even demolition
  • Any work on a piece of land that includes construction activities for walls, power lines, electrics, water, pipelines and sewers
  • The installation of lighting, heating, air conditioning, power supplies, drainage, water supply and fire protection
  • Painting and decorating of any internal or external surfaces of a building

Should you have any questions or need any further information in regards to the VAT reverse charge scheme please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

Construction Industry Scheme (CIS) Refresher | Tax Advice for CIS | CIS Accountancy Help Bristol
Construction Industry Scheme (CIS) Refresher 758 513 Stepping Stones Accountancy

Construction Industry Scheme (CIS) Refresher

The Construction Industry Scheme (CIS) is a HMRC initiative where, if you work on a self-employed basis for a contractor in the construction industry (not as an employee), CIS rules state that the contractor needs to withhold tax payments from you at a rate of either 20% if you are registered or 30% if you are not. This is a slightly different set-up to other self-employed professionals who would receive gross payments with no tax is deducted.

It is not just typical construction work that the CIS covers, it can also include site clearing, repairs, demolition and decorating. The HMRC website has a very useful breakdown on what is included for the CIS – https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr14000.

Anybody operating under the CIS needs to accept that, if construction services are delivered directly to a homeowner, then this work is outside of the scheme’s remit and customers will need a gross bill with no tax exclusions.

In essence you should register for CIS if:

  • You are acting as a contractor and using the services of self-employed professionals to complete construction work
  • You are acting as a self-employed professional offering construction services

If you have any questions in regards to CIS then our team would be delighted to help, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

How do I Register my Accountant as my HMRC Agent? 1024 541 Stepping Stones Accountancy

How do I Register my Accountant as my HMRC Agent?

We regualrly get asked, “how do I regsiter my accountant as my HMRC agent?”. You will find all the answers in our fun animated video.

Adjusting a CJRS claim for Employment Allowance | CJRS Advice Bristol | Covid-19 Business Support Bristol
Adjusting a CJRS Claim for Employment Allowance 758 513 Stepping Stones Accountancy

Adjusting a CJRS Claim for Employment Allowance

The Coronavirus Job Retention Scheme (CJRS) has been set-up by the Government to enable companies to claim up to 80% of an employee’s wages plus any National Insurance or pension contributions during the coronavirus crisis. However, many companies have been left wondering what impact this new scheme might have on their ability to claim Employment Allowance (EA).

In order to provide clarity to the situation, HMRC have recently confirmed that the rules for claiming and applying for EA WILL NOT change as a result of a claim under the new CJRS for Class 1 National Insurance (NI) costs.

Those employers who are eligible can continue to utilise the EA scheme to pay a reduced amount of NIC until their allowance runs out or until the end of the tax year, whichever is soonest. (Currently the employment allowance scheme enables eligible employers to reduce their annual NI liability by up to £4,000). Eligibility applies to a business or charity where their NI liabilities were less than £100,000 in the previous tax year.

In order to calculate how much National Insurance Contributions an employer can claim back through the scheme, they simply need to subtract any EA that is used in a specific pay period. If the employer finds that the amount of EA being claimed will not cover the total employer NIC which is due, then grants are available.

If an employer chooses to delay their EA claim and as such they have employment allowance that is unused at the end of a tax year, then they can use it to reduce other tax costs.

It is important to note that any business needs to make sure they are not receiving relief for the same costs twice, as this can be considered as fraud and may result in claims being investigated. This is where it is best to consult with full qualified accountant who will be able to provide advice, guidance and support for such matters.

If you have any questions or need some assistance then please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk

Contractors and Construction Industry Scheme | Accountancy Advice
Contractors and the Construction Industry Scheme 758 513 Stepping Stones Accountancy

Contractors and the Construction Industry Scheme

The Construction Industry Scheme (CIS) requires contractors to deduct payments from any subcontractors that they use in order to make advance payments towards the subcontractor’s tax and National Insurance.

It is a legal requirement that all contractors register for the scheme, whether a sole trader or a limited company, if:

  • they pay subcontractors to do construction work
  • their business doesn’t do construction work but usually spends more than £1 million a year on construction

There are a number of professions within the construction industry though who are exempt from the CIS including architecture, surveying, planning and civil/structural engineers. Such peculiarities can make the scheme a little tricky to understand.

For those companies who are required to register though there are some very specific guidelines that must be followed:

  • they must register for CIS before taking on their first subcontractor
  • they must check if they should employ the person instead of subcontracting the work. There may be a penalty if they should be an employee instead
  • they must check with HM Revenue and Customs (HMRC) that their subcontractors are registered with CIS
  • when paying subcontractors, they usually need to make deductions from their payments and pay the money to HMRC.
  • they need to file monthly returns and keep full CIS records – they may get a penalty if they don’t
  • they must let HMRC know about any changes to their business

Whilst more information is available from GOV.UK , the rules surrounding the Construction Industry Scheme can be somewhat confusing so it always best to get professional advice if you are unsure.

At Stepping Stones we work with many companies within the construction industry and as such are well placed to provide advice and guidance to both contractors and subcontractors. Why not give us a call and see how we can help you, we would be delighted to work with you.

 

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