Originally written by Dan Matthews on Small Business
On 1 July, the European Union will change the way in which VAT is reported and paid, potentially impacting anyone in the UK operating a business selling products & services online to consumers and practicing distance selling.
“The Covid-19 pandemic has caused a big shift in working patterns and, as a result, a lot of people have out of necessity or opportunity taken to start up an e-commerce business or switch to digital selling,”
“The change to EU VAT reporting will help. It’s designed to simplify tax reporting, promote ecommerce and increase online cross-border transactions. It will support small business and remove barriers in a post-Brexit environment.” says Asif Chaudhry, Director, Product Marketing at Sage.
What will change?
The changes are that for sales to consumers (basically anyone without a VAT registration) the VAT is charged based on which country the customer is in, not the country of the seller. Prior to this date there were thresholds, and businesses selling below these thresholds could charge their home VAT rates which avoided needing to know many different VAT rates.
Alongside this change the EU is expanding their one stop shop (OSS) simplifications which optionally allow businesses outside of the
Tag Archive for VAT
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HMRC to go easy on small business strangled with Covid debt
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Small businesses struggling with Covid debt will not be forced to pay overdue tax to HMRC immediately, says business secretary Kwasi Kwarteng.
HMRC had manoeuvred itself to be first in line to be payed-out should a small business go bust post-Covid. Being pressured into payment by tax collectors can be an extremely unpleasant experience for owner-directors of small businesses.
But Mr Kwarteng has told the Institute of Directors and business group R3, which represents insolvency and restructuring practitioners, that HMRC will go easy on small businesses unable to pay tax because of Covid-19 debt.
>See also: Small business owners who duck out of repaying Covid debt face ban
The government wants to avoid a tsunami of insolvencies this summer.
The news will come as a relief to small business owners, who already have enough to worry about with a stop-start reopening post-lockdown just as Covid-19 financial support such as Bounce Back Loans start having to be repaid.
Insolvency practitioners have warned that many small businesses will struggle to stay afloat from July when emergency Covid-19 financial support measures begin to be wound down.
In a letter, obtained by the Financial Times, Mr Kwarteng wrote that HMRC would be updating its
Hot Business News Today
HMRC to go easy on small business strangled with Covid debt
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Small businesses struggling with Covid debt will not be forced to pay overdue tax to HMRC immediately, says business secretary Kwasi Kwarteng.
HMRC had manoeuvred itself to be first in line to be payed-out should a small business go bust post-Covid. Being pressured into payment by tax collectors can be an extremely unpleasant experience for owner-directors of small businesses.
But Mr Kwarteng has told the Institute of Directors and business group R3, which represents insolvency and restructuring practitioners, that HMRC will go easy on small businesses unable to pay tax because of Covid-19 debt.
>See also: Small business owners who duck out of repaying Covid debt face ban
The government wants to avoid a tsunami of insolvencies this summer.
The news will come as a relief to small business owners, who already have enough to worry about with a stop-start reopening post-lockdown just as Covid-19 financial support such as Bounce Back Loans start having to be repaid.
Insolvency practitioners have warned that many small businesses will struggle to stay afloat from July when emergency Covid-19 financial support measures begin to be wound down.
In a letter, obtained by the Financial Times, Mr Kwarteng wrote that HMRC would be updating its
Hot Business News Today
Kevin Hollinrake calls for abolition of business rates
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Conservative MP Kevin Hollinrake has reiterated his call for the abolition of business rates ahead of next month’s Budget on March 3.
Business rates, he said, are “anachronistic” and should be replaced instead by a 3 per cent increase in VAT that all businesses would pay.
This 3 per cent increase in VAT to 23 per cent would affect all businesses, not just retailers, and the £30bn raised each year would cancel out the scrapping of business rates.
>See also: Just when you thought it couldn’t get worse, business rates return in April
Currently, the Treasury appears to be leaning towards a 2 per cent online sales tax to be announced in the autumn statement.
But Mr Hollinrake points out that most businesses now have a mixed model of physical and online sales, and calculating which sales were digital would be complex.
Mr Hollinrake presented his bill calling for the abolition of business rates last month in the House of Commons. So far, there has been no Treasury response. But his conversations with retailers such as Tesco, B&Q and Screwfix have been positive, as has the response from the ACS, which represents convenience stores.
>See also: Chancellor Rishi Sunak may
Hot Business News Today
Kevin Hollinrake calls for abolition of business rates
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Conservative MP Kevin Hollinrake has reiterated his call for the abolition of business rates ahead of next month’s Budget on March 3.
Business rates, he said, are “anachronistic” and should be replaced instead by a 3 per cent increase in VAT that all businesses would pay.
This 3 per cent increase in VAT to 23 per cent would affect all businesses, not just retailers, and the £30bn raised each year would cancel out the scrapping of business rates.
>See also: Just when you thought it couldn’t get worse, business rates return in April
Currently, the Treasury appears to be leaning towards a 2 per cent online sales tax to be announced in the autumn statement.
But Mr Hollinrake points out that most businesses now have a mixed model of physical and online sales, and calculating which sales were digital would be complex.
Mr Hollinrake presented his bill calling for the abolition of business rates last month in the House of Commons. So far, there has been no Treasury response. But his conversations with retailers such as Tesco, B&Q and Screwfix have been positive, as has the response from the ACS, which represents convenience stores.
>See also: Chancellor Rishi Sunak may
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Half of small business exporters struggling with new rules post Brexit
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Half of mainly small business exporters that send goods into the EU are facing difficulties trading post Brexit.
For manufacturers the problems are just as bad, with 51 per cent finding life exporting to Europe more difficult after Brexit, according to a British Chambers of Commerce survey.
Overall, nearly one third of businesses (30 per cent) surveyed said they found trading more difficult in January following Britain’s exit from the EU.
>See also: Half a million businesses at risk of collapse without more support
The main problems cited by exporters over Brexit were increased administration, costs, delays and confusion over what rules to follow.
In particular, the BCC would like to see firms be able to write off what they spend on extra admin and customs costs against their tax bill, and for the government to push back against the EU imposing extra health checks on food and animal exports from April, as well as full customs checks from July.
The BCC would also like to see the EU and UK government work together to try and minimise unhelpful burdens, including aspects of rules of origin and VAT.
The research is the first large survey of how companies are coping
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How to avoid paying £130,000 in VAT registration fees if you export to EU
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Businesses selling goods into Europe face having to pay for VAT registration in all 26 EU countries, costing up to £130,000.
Britain left the EU on January 1 and small businesses now have to register for VAT in each country they sell directly to customers in. Plus they will need to have a physical business representative in each country, and not just be brass-plate company.
Given that it costs between £3,000 and £5,000 to register for VAT per EU country, small businesses could be left with a bill of £130,000 just for the right to pay VAT in each territory.
>See also: Local authorities blame government for slow release of Covid-19 grants
Sean Glancy, VAT and indirect taxes partner at accountant UHY Hacker Young, said: “The risk here is that a UK business moving goods to consumers in, for example, Germany, Italy and Austria would have to register for VAT in all of these countries. If that multiplies across Europe, that is a lot of registrations, time, resource, and cost.”
The good news is that this is only until July 1, when the EU will bring in a one-stop-shop for VAT registration throughout Europe, which means UK businesses
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Businesses ‘crippled’ by Tier 4 call for more government help
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
UPDATED: There are now over a million business premises shut down across the UK, according to the Federation of Small Businesses.
Many of these small businesses have “no cash reserves left”, according to the FSB, having invested heavily in making themselves Covid secure.
Meanwhile, business group UK Hospitality said that the sector has been “effectively shut down” from today, following yesterday’s widening of Tier 4 restrictions to much of the rest of Britain, which limits pubs, cafes and restaurants to takeaway only.
Three quarters of the population of England are now living under Tier 4 rules, which also require non-essential retailers such as clothing and homeware stores, gyms and hair and beauty salons to close.
>See also: Which small businesses can stay open in Tier 4 lockdown?
Kate Nicholls, chief executive of UK Hospitality, has called for new support grants and the extension of the reduced VAT rate and the business rates holiday beyond March if the government wants to avoid “hundreds and thousands of job losses”.
On Tuesday, FSB chairman Mike Cherry wrote to Rishi Sunak proposing a five-point package including converting Covid emergency debt into shares for small business employees, another round of grants and a German-style
Hot Business News Today
Businesses ‘crippled’ by Tier 4 call for more government help
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Businesses are calling for further support to help them stave off collapse following the government’s shock imposition of Tier 4 on Saturday.
Specifically, business lobby groups are calling for the business rates holiday to be extended for another 12 months from January, VAT relief and additional direct support for businesses forced to shut.
Business rates are currently due to restart from April, which will cost already punch-drunk companies £12.8bn during 2021, according to property adviser Altus Group.
>See also: Bounce Back Loan Scheme extended until the end of March
Non-essential shops, hairdressers and leisure and entertainment venues were forced to close yesterday after Boris Johnson’s abrupt announcement on Saturday afternoon to enforce new Tier 4 restrictions amid concerns about a more virulent coronavirus strain spreading rapidly in London and the South East.
Health secretary Matt Hancock suggested yesterday Tier 4 will stay in place until the vaccine programme has sufficiently immunised the population – which could take months. There is now talk of Tier 4 being imposed until Easter.
Meanwhile, all non-essential shops in Wales will shut from Boxing Day when it mirrors England’s Tier 4 restrictions, while Scotland and Northern Ireland also go into their own three-week and
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Treasury eyes hitting self-employed gig workers with VAT charge
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Self-employed Uber drivers, those who make a living renting out rooms on Airbnb, and other gig economy workers could find themselves having to pay VAT.
The Treasury is eyeing slapping VAT on self-employed gig workers and others in the sharing economy, as it tries to claw back cash to pay for the Covid pandemic.
What this means is that Uber fares or Airbnb stays could cost 20 per cent more.
>See also: Treasury to discuss COVID-19 grant for company directors
The Treasury has issued a call for evidence as concern grows that as much as £20bn could be lost as tax revenue as activity shifts online. According to PwC, the total value of the UK sharing economy will be £140bn by 2025 compared with £7bn in 2016.
For example, plumber call-out firm Pimlico Plumbers charges 20 per cent VAT to customers, but a plumber found on Taskrabbit does not because most sole traders fall below the VAT threshold of £85,000 of turnover. Similarly, accounting firms charge VAT to clients on billable hours but a freelance accountant found on Upwork may not.
Although the government has pledged not to raise the rate of VAT under the “triple tax lock”, there