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New VAT Tax Penalty System for VAT Returns
The new penalty system for late submissions from VAT customers is intended to be fairer for those who occasionally miss deadlines, but cracks down on repeat offenders. Points will be accrued for late filing with penalties issued once the points threshold has been reached. For late payments after a two-week grace period, fines will be charged based on balance owed and the amount of unpaid time.
The new points-based system will be available on the HMRC online portal, making it easy to track what is held on record. Surcharges are currently sent directly to the individuals on the account but within this news system your accountant will be able to easily view the balances held on account for a client without having to contact HMRC directly for a breakdown, saving time for all involved.
When is this coming into effect? April 2022
Extension of MTD for VAT
The Making Tax Digital (MTD) scheme, which requires businesses to keep digital records and use third-party software to submit tax returns, will apply to smaller businesses next year.
For those businesses with little or no digital technology, this extension will require a seismic shift towards an increased need for digital infrastructure. Therefore, this is likely to create immediate challenges for SMEs. VAT tends to create compliance issues for those submitting returns but such issues can be mitigated by moving your business to cloud-based bookkeeping systems with digital capture of expenses and invoices.
When is this coming into effect? April 2022
Return to 20% VAT Rate for Tourism, Hospitality and Leisure
The government introduced a series of VAT reductions for tourism, hospitality and leisure sectors during the pandemic, but from April2022, the current 12.5% VAT rate will return to 20%, despite industry bodies campaigning for the 12.5% rate to become a permanent measure.
The VAT reduction helped hospitality firms subsidise their operations as they were then able to charge the same price but benefited from a reduced VAT rate. The increase will affect other sectors too, those supplying services to the sector will be affected, that along with the fluctuation of VAT rates being charged between sectors will cause further issues.
We highly recommend talking with you accountant to review how to manage a price transition both from suppliers and to end consumers (your clients) so that every element can be factored in so that your business does not bear the biggest brunt of the change.
When is this coming into effect? April 2022
Other Tax Changes to be Aware of:
One-year 50% business rate discount for retail, hospitality and leisure sectors
Eligible businesses can claim up to 50% discount for their business rate bills, capped at £110,000.
When is this coming into effect? Effective now
Capital gains tax reporting extension
The deadline for filing capital gains tax returns and paying any tax owing following a property disposal which has increased in value) has now been extended from 30 days to 60 days.
When is this coming into effect? Effective now
Corporation tax rate increase
Corporate tax will increase from 19% to 23% for firms whose annual profits exceed £250,000.
When is this coming into effect? April 2023
Green investment relief
In the consultation status, this potential proposal for a green investment relief will incentivise businesses to invest in green technologies such as solar panels, electric vehicle charging points and environmentally friendly building improvements.
When could this come into effect? Expected 2023
If you have any questions about the upcoming changes and how it could affect you, get in touch with us today for a no obligation chat.
We can help guide you through these changes and provide more information on any topics covered in this article.
Call us on 01322 555 442 or email us at happytohelp@bluerocketaccounting.comto speak to us today.
The information and data in this article was correct at the time of publishing and every attempt is made to ensure its accuracy. However, it may now be out of date or superseded. Blue Rocket Accounting make no representation or warranty of any kind regarding the content of this article and accept no responsibility or liability for any decisions made by the reader based on the information and/or data shown here.
