A report by the Office of Tax Simplification (OTS) calls on the government to prioritise action to ‘address long-standing concerns about the experience of smaller businesses’. The report considers the business lifecycle, especially those starting up and provides recommendations in five areas:

• providing simple step-by-step guidance about the key things a business needs to do in its early days to help things run smoothly
• improving the operation of the PAYE system
• implementation of HMRC’s Agents Strategy
• improving the mechanics of the Corporation Tax return process
• ensuring that tax changes are built on an understanding of business processes.

If you would like any help with your taxes at any stage of your business life cycle, please do get in touch.

Internet link: GOV.UK simplifying tax

Making Tax Digital for VAT (MTD for VAT) is now live. Here, we answer some key questions.

Q: Do all VAT-registered businesses start at once?

A: Each business has its own start date, dependent on its VAT quarters. If your taxable turnover is above £85,000, MTD for VAT rules are compulsory for your first VAT return period starting on or after 1 April 2019

For monthly returns, the first MTDfV submission will be as follows:

The only exceptions are for businesses in the deferrals category. These adopt MTD for VAT rules for their first VAT return period starting on or after 1 October 2019.

Q: Which businesses are subject to the deferral?

A: These are businesses that are: part of a VAT group or VAT division; based overseas; trusts; not-for-profit organisations not set up as a company; local authorities; public corporations; those making payments on account; annual accounting scheme users; and those using the VAT GIANT service. These businesses should have received written notification of their deferral status from HMRC.

Q: What if my business voluntarily registered for VAT?

A: If your turnover is below the VAT registration limit, you don’t have to enter MTD for VAT, and you can carry on filing as you do at present. But if you prefer, you can join MTD for VAT voluntarily

Q: Does my business have to do anything to get into MTD for VAT?

A: Yes. A business actually has to sign up to MTD for VAT. To do this, you need your Government Gateway user ID and password and VAT registration number. HMRC should confirm, by email, that your sign-up has been successful. Alternatively, we can sign up for you.

Q: Are there other deadlines to watch?

A: When you have signed up for MTD for VAT, HMRC will expect all future VAT returns to be submitted via MTD software. It is therefore very important that you have submitted any outstanding returns and are ready to file all future returns with MTD software when you sign up.

If you usually pay VAT by direct debit, you cannot sign up in the 15 working days before or five working days after sending in a VAT return.

Q: Are there penalties for getting MTD for VAT wrong?

A: MTD for VAT is backed up by a system of penalties. For the first year, however, HMRC intends to take a slightly more lenient approach on penalties for the issue of digital links between software products. Businesses are given until 31 March 2020 to have digital links in place between software products.

HMRC refers to this as a ‘soft landing’ penalty period. During this period, cut-and-paste will continue to be an acceptable way to transfer information to HMRC. For businesses in the deferral group, the soft landing penalty timetable is adapted to give them 12 months to become fully compliant in putting digital links into place.

However, there is an important exception to this. Where VAT return information is transferred out of the accounting records into a separate program for submission to HMRC via the Application Programming Interface (API), transfer must be digital. This would apply, for example, where figures for the VAT return are collated in a spreadsheet and then transferred into bridging software for final submission. The transfer from spreadsheet to bridging software must use a digital link.

These penalties are specific to MTD, and are in addition to HMRC’s other penalty powers.

Please do not hesitate to contact us for further advice.

The Scottish government has further delayed its plans to replace Air Passenger Duty (APD) with Air Departure Tax (ADT). The plans to introduce ADT have been delayed beyond 2020.

In 2016, as part of the Scotland Act, the Scottish Parliament was given devolved powers to charge tax on travellers leaving Scottish airports. Proposals were put forward to replace the UK-wide APD with an ADT.

The ADT was set to take effect in April 2018, but was delayed due to issues surrounding the current exemption which applies to airports in the Highlands and Islands.

Commenting on the delay, Kate Forbes MSP, Minister for Public Finance and Digital Economy, stated:

‘The Scottish government has been clear that it cannot take on ADT until a solution to these issues has been found, because to do so would compromise the devolved powers and risk damage to the Highlands and Islands economy.

‘While we work towards a resolution to the Highlands and Islands exemption, we continue to call on the UK government to reduce APD rates to support connectivity and economic growth in Scotland and across the UK.’

Internet link: GOV.SCOT news parliamentary business

Business groups, including the British Chambers of Commerce (BCC) and the Confederation of British Industry (CBI), have commented on the six-month ‘flexible’ extension of Article 50, granted to the UK by EU leaders.

The extension potentially pushes ‘Brexit Day’, the day when the UK officially leaves the EU, to 31 October 2019.

Reacting to the news, the BCC stated that the flexible extension is ‘preferable’ for most businesses. It said:

‘Politicians must urgently agree on a way forward. It would be a disaster for business confidence and investment if a similar late-night drama is played out yet again in October.’

The CBI said that UK businesses will now ‘adjust their no-deal plans’ instead of cancelling them. Carolyn Fairbairn, Director General of the CBI, said:

‘For the good of jobs and communities across the country, all political leaders must use the time well. Sincere cross-party collaboration must happen now to end this crisis.’

Internet links: BCC news CBI article

HMRC has published a list of businesses that have not met their obligations under the Money Laundering Regulations.

As a supervisor of the Money Laundering Regulations HMRC has a duty to publish details of businesses that have been penalised for not complying with the regulations.

HMRC advises that it considers cases individually to decide whether to publish details in full, anonymously, or not at all. Where a decision is made to publish in full, the following information may be published:

• the name and address of the business owner or business
• the nature of the breach or breaches
• the penalty issued by HMRC
• the status of any appeal against the penalty

HMRC publishes anonymously if it considers that the effect of publishing details about an individual or business would be disproportionate.

Internet link: GOV.UK money laundering