The UK exited the EU VAT regime, Customs Union and Single Market from 1 January 2021. This means the loss of a range of compliance simplifications and the imposition of customs declarations, goods regulations, services and import VAT.

In this article HERE you can find an outline of the major changes affecting VAT treatment after the UK leaving the EU.

Here you can find the most recent guidance from the government; Import goods into the UK: step by step

If you import goods into Great Britain from outside the UK or from outside the EU to Northern Ireland you may have to pay import VAT on goods. For supplies of services from outside the UK you must account for VAT under the reverse charge procedure.

Guidance on Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland

Export goods from the UK: step by step
Guidance on how and when you can apply zero-rated VAT to exported goods – Goods exported from the UK from 1 January 2021

TOMS – Tour Operators Margin Scheme 

If you supply digital services to private consumers you can read the guidance here – VAT rules for supplies of digital services to consumers 

CIS VAT changes

If you’re in the construction sector changes on VAT are coming on 1st March 2021.

VAT reverse charge technical guide HERE.

VAT is due when a VAT invoice is issued, or payment is received, whichever is earlier.

For invoices issued for specified supplies that become liable to the reverse charge, the VAT treatment for invoices with a tax point:

  • before 1 March 2021 – the normal VAT rules will apply and you should charge VAT at the appropriate rate on your supplies
  • on or after 1 March 2021 – the domestic reverse charge will apply
MTD advisor

At Rosemary Bookkeeping Newbury & Basingstoke, we are pleased to say we are Quickbooks Making Tax Digital Certified.

If you need to get ready for Making Tax Digital and don’t know where to start, what it means, or if it applies to you?

Get in touch today and we can arrange a free bookkeeping health check and see how we can help with Making Tax Digital.

MTD advisor

about making tax digital

about making tax digital

Making Tax Digital will change the way your business pays its taxes to HMRC. It is a scheme by the UK government to make it easier for businesses and individuals to manage their taxes. The first stage comes into play on 1st April 2019 and is called Making Tax Digital for VAT.

From that date, VAT-registered businesses (those companies with their turnover over the VAT threshold, which is currently £85,000) will be required to digitally submit their tax records to HMRC. They will no longer be able to do this via HMRC’s Government Gateway website.

What does that mean for businesses?

If you are VAT registered, then you will need to move to digital record keeping (i.e. use software to record all your VAT invoices and receipts). If you are not VAT registered, then digital record keeping is optional for the time being.

If you are VAT registered and do not yet use software to record your VAT information (invoices to customers and from suppliers) you need to start planning for Making Tax Digital. The implementation date is 1st April 2019.

My company uses spreadsheets for business records – what will that mean for me?

You can still continue to use spreadsheets to digitally record and store your business records. However, you will need to make sure those spreadsheets can digitally submit any necessary data to HMRC.

My business is not VAT registered and I don’t know if I will earn £85,000 this year. What should I do?

You will only be required to follow the rules of Making Tax Digital if your turnover exceeds £85,000 – the VAT threshold. You will need to keep track of your turnover over the last 12 months on a cumulative basis, and if at any point your total turnover exceeds £85,000 you will need to register for VAT.

What if I temporarily go over the VAT threshold?

If your business isn’t VAT registered and you do go over the threshold, you will need to comply with the requirements of Making Tax Digital. If your taxable turnover then drops below the threshold, you still need to continue complying with the legislation.

My business is under the VAT threshold, but I want to be part of Making Tax Digital. Is that possible?

Yes. Your business can choose to waive exemption if you wish to voluntarily follow the requirements of Making Tax Digital.

It’s important to note that “Making Tax Digital” is only coming in to play for VAT registered businesses in April 2019. For all other businesses, it comes into force in April 2020.

With this in mind, it’s a great idea to get started on digital bookkeeping so you are ready for the change. Starting early will help you to understand the workload involved and you will have plenty of time to decide if outsourcing to a well prepared Bookkeeper would be the best option for you.

Outsourcing is actually a very realistic option for business owners so don’t be scared. If you’re still not sure, Rosemary Bookkeeping are more than happy to come and help you find out about making tax digital or just do a 1-2-1 health check with you and give you the opportunity to decide for yourself if you think you could benefit with no obligation, contact your local Rosemary Bookkeeper today.