VAT RETURNS ASSISTANCE
IN MILTON KEYNES

The UK is set to leave the EU on 29 March 2019 and as things currently stand, it would seem that we are no closer to reaching a negotiated withdrawal agreement. The chances of Britain leaving the EU without any working agreement, known as a 'no deal' Brexit is in some ways looking increasing likely, and certainly cannot be ignored.

The government remains confident that a deal will be reached but accepts that it would be remiss not to consider the potential scenario where there is 'no deal' outcome at the end of March 2019. With this in mind, HMRC has published some fairly detailed guidance for businesses on what will happen if the UK leaves the EU with no full or transitional agreement in place.

The series of technical notes published by HMRC are designed to help businesses make informed plans and preparations for a possible 'no deal' scenario. HMRC calls this'contingency planning for a scenario that the UK government does not expect to happen'.

If the UK left the EU on 29 March 2019, without a deal, there would be immediate changes to the procedures that apply to businesses trading with the EU. This means that the free circulation of goods between the UK and EU would cease.

Businesses that are importing goods from the EU would be required to follow customs procedures in the same way that they currently do when importing goods from a country outside the EU. This would mean that an import declaration would be required, customs checks, and any customs duties due must be paid.

There would also be multiple VAT issues including the requirement to account for import VAT on goods coming from the EU. The government has already confirmed that postponed accounting for import VAT on goods brought into the UK, will be introduced if the UK leaves the EU without an agreement.

We would advise any UK businesses bringing in goods from the EU to seriously consider what action will be required in the event of a 'no deal' Brexit. Already, many large multinationals are working on contingency arrangements, these include ensuring that extra stock is held in the UK in case of a Brexit meltdown at the UK's borders.

UK businesses that currently trade within the EU will find this a big step change and are likely to require a significant amount of assistance to put the right systems in place to deal with the changing circumstances. If you already import goods from the EU, or are actively seeking out new suppliers in the EU, please contact us as we can help you begin the necessary contingency planning. 

Bron: HM Government | 04-09-2018

We have already examined matters that must be addressed by those importing goods to the UK if there is a 'no deal' Brexit (See previous articles). In this article we will look at the impact this would have on UK businesses exporting goods to the EU, currently known as intra-EU dispatches.

A no-deal Brexit would see tariffs imposed on goods that the UK sends to the EU.

It is also important to remember that the deadline for the UK and EU to make a deal is much closer than March 2019 as any agreement will need to be ratified by both the UK and the EU before that date. If the UK leaves the EU without any agreement in place businesses exporting goods to the EU will be required to follow customs procedures in the same way that they currently do when exporting goods to a non-EU country.

If the UK leaves the EU without an agreement, VAT registered UK businesses will continue to be able to zero-rate sales of goods to EU businesses and will no longer be required to complete EC sales lists. However, EU member states will treat goods entering the EU from the UK in the same way as goods entering from other non-EU countries. Associated import VAT and customs duties will become due when the goods arrive into the EU.

A 'no deal' Brexit would also mean the end of special VAT 'distance selling' rules for the sale of goods to EU consumers and changes to the UK VAT Mini One Stop Shop rules.

UK businesses that currently trade within the EU will find this a big step change and are likely to require a significant amount of assistance to put the right systems in place to deal with the changing circumstances. If you already export to the EU or are actively seeking out new markets for your goods in the EU, please contact us as we can help you begin the necessary contingency planning. 

Bron: HM Government | 04-09-2018

There are special intestacy rules that govern how assets are divided if you die without making a will. If this happens your assets are passed on to family members in accordance with a set legal formula. This can result in a distribution of assets that would not be in keeping with your final wishes, and can be especially problematic for cohabitees (a couple who live together but are not married and have not entered into a civil partnership).

However, if someone dies without a will or any known family, their property passes to the Crown as ownerless property. This is known as 'bona vacantia', which literally means vacant goods and by law this property (including money and other personal possessions) passes to the Crown. The bodies that deal with bona vacantia claims vary across the United Kingdom, but they all ultimately, represent the Crown.

It is possible to make a claim on the estate but only of you are an 'entitled relative'. The general rules are:

It is also possible for someone who lived with the deceased (such as a partner) to apply for a grant from the deceased person's estate. The rules are complex and serve as an important reminder to make a will and thereby ensure that your assets are divided amongst family, friends and charities in accordance with your wishes.

Bron: HM Revenue & Customs | 04-09-2018

The Court of Appeal recently heard a taxpayer's appeal against a decision of the Upper Tribunal to recover an amount of overpaid VAT. The claim related to historic VAT claims colloquially known as Fleming claims. Until March 2009, there existed an important opportunity to make claims dating back as far as the introduction of VAT in 1973 without being capped. The last major deadline concerned 'Fleming' type claims expired on 31 March 2009.

A seemingly valid claim by solicitors acting for Bratt Autoservices to have almost £1.3m VAT repaid was submitted on 30 March 2009 within the published deadline. However, HMRC rejected the claim on the basis that the claim did not meet the necessary statutory requirements. The requirements that caused that the claim to fail was that the VAT reclaimed was not broken down into the VAT return periods to which it applied. The taxpayer appealed against this decision to the First-tier Tribunal and the appeal was allowed.

HMRC's appeal to the Upper Tribunal (UT) was allowed after the UT accepted HMRC's argument that there was good reason for requiring a 'claim' to be linked to prescribed accounting periods. The taxpayer lodged an appeal to the Court of Appeal. Unfortunately for the taxpayer, the Court of Appeal upheld the decision of the Upper Tribunal and dismissed the appeal.

There are unlikely to be many more cases relating to the exact points raised here. However, this case serves as an important reminder to remember to ensure that any claim for overpaid tax, is made within the current time limits and meets the statutory requirements required by the relevant legislation.

Bron: Court of Appeal | 04-09-2018

The government’s Bank Referral Scheme was launched in November 2016. The scheme, created by the Small Business, Enterprise and Employment Act 2015, is designed to help improve SME access to finance and competition in the SME lending market.

The bank referral scheme imposes a statutory duty on nine of the UK’s biggest banks to pass on the details of small businesses, who have been unsuccessful in applying for finance to three Government designated alternative finance platforms.

The three finance platforms are the Alternative Business Funding, Funding Options and Funding Xchange. These platforms are, in turn, required to share their details with other alternative finance providers to help small businesses access much needed finance not available from mainstream banks.

New figures published by HM Treasury have revealed that in the period from 1 November 2016 to 30 June 2018, nearly 19,000 small businesses who were rejected for finance from one of the big banks have been referred under the scheme. Of these, over 900 businesses went on to secure more than £15m of funding with an average value of £17,285. 

Bron: HM Treasury | 04-09-2018

Student Loans are part of the government's financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying, and it is HMRC’s responsibility to collect repayments where the borrower is working in the UK. The Student Loans Company (SLC) is directly responsible for collecting the loans of borrowers outside the UK tax system.

The main finance package elements available to students include loans for tuition fees and maintenance loans (to help with living costs). The maximum loan amounts are capped and the maximum amount depends on the student's circumstances. Maintenance grants are also available under certain circumstances. The grants do not have to be repaid but do reduce the amount of maintenance loan a student is entitled to claim.

Students that have finished their studies and entered the workforce, must begin to make loan repayments from the April after they have finished their studies or when their income begins to exceed the annual threshold. The annual threshold for 2018-19 is £18,330 for plan 1 and £25,000 for plan 2. The terms of loan repayment for courses of study, started before 01 September 2012 are referred to as 'Plan 1', and those started after 01 September 2012, are referred to as 'Plan 2'.

Taxpayers that have made repayments but whose total annual income was less than the respective thresholds, can apply for a student loan refund. However, an application cannot be made until after the relevant tax year has finished. Taxpayers can also apply for a refund from the Student Loans Company if the loan debt has been repaid in full.

Bron: HM Revenue & Customs | 04-09-2018

We would like to remind any students that had a summer, job that they may be entitled to claim back any tax overpaid. Students (and other temporary workers) are not required to pay any income tax if their earnings are below the tax-free personal allowance.

When preparing payroll calculations, employers are required to calculate the amount of tax you need to pay on the basis that you would be working for the rest of the tax year. This means that an overpayment of income tax can often happen where students earn more than their monthly allowance of £987 (£11,850 / 12) but over the course of the tax year earn less than their annual allowance. A student only working over the summer and earning more than £987 a month is unlikely to have exceeded the current £11,850 tax free personal allowance threshold.

Students that expect to earn less than £11,850 in the current tax year, (i.e. to 5 April 2019) can complete the P50 form entitled Claim for repayment of tax when they have stopped working. A refund of overpaid tax can be requested using an online version of the P50 form. The P50 form can only be used if you are not going to work for at least the next 4 weeks and are not claiming certain state benefits.

Any students that are continuing to work for the rest of the tax year in part-time jobs, should consider waiting until the end of the year to make a claim.

Bron: HM Revenue & Customs | 04-09-2018

Taxpayers who have lost or forgotten their national insurance number should first try and locate the number on paperwork such as their tax return, payslip or P60. Taxpayers with access to their personal tax account can also login to view or print a letter with their national insurance number.

If the national insurance number cannot be located, a request can be submitted in writing to HMRC using form CA5403. The form has recently been updated. HMRC will not disclose the number over the telephone, and will instead send the details to the applicant by post. The details should arrive within 15 days.

Teenagers should automatically be sent a letter just before their 16th birthday detailing their national insurance number. These letters should be kept in a safe place. The old plastic national insurance cards that some of our readers may remember are no longer available.

The national insurance number helpline, can help those aged between 16 and 20 who have not received a letter with details of their national insurance number as well as other new applicants.

An individual must have the right to work or study in the UK in order to apply for a national insurance number.

Bron: HM Revenue & Customs | 04-09-2018

HMRC has advised that it has changed its approach to charging financial penalties when enforcing the National Minimum Wage (NMW) where there has been a transfer of employees from one employer to another under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

Since 2 July 2018, where there has been a TUPE transfer of employees, all NMW liabilities, including the full financial penalty amount, are being enforced against the new employer (the transferee). The financial penalty is up to 200% of the pay arrears, capped at £20,000 per worker.

HMRC previously charged the former employer (the transferor) all or part of the penalty where it was triggered by arrears that accrued before the employees were transferred under TUPE.

Bron: HM Revenue & Customs | 02-09-2018

When spouses or civil partners are living together they are both treated as separate individuals for Capital Gains Tax (CGT) purposes. However, assets can be transferred between them free of CGT. This means that when a couple are together there is no CGT payable on assets gifted or sold to their spouse or civil partner.

There are different CGT rules that apply to a married couple that are divorced or to civil partners whose civil partnership is dissolved. These rules can also apply to couples after separation. In short, where a couple are no longer living together, then the transfer of an asset between them is usually treated in the normal way, i.e. as taking place at current market value. There is an exception for couples that remain together but are living separately for other reasons.

For CGT purposes, ex-couples can treat the year of their permanent separation as if they were still together. Therefore, the optimum time for a couple to separate would technically be at the start of the tax year. This would allow the ex-couple up to a year to plan how to split their assets in the most tax efficient way. Whilst tax concerns may be low on their list of priorities, careful planning can help couples reduce tax costs and ensure the most tax-efficient split of any joint assets.

The couple should also give proper thought to what will happen to the family home, any family businesses as well as the Inheritance Tax implications of separation and / or divorce. It is also important to try and make a financial agreement that is agreeable to both parties. If no agreement can be reached, a court approved 'financial order' may be required.

Bron: HM Revenue & Customs | 28-08-2018

Costs that can be deducted by individuals that have a property rental business, depend on the type of property that is being rented out. There are three main categories of property business that need to be considered.

This is by far the most common type of investment property held by individuals. Tax relief can be claimed on allowable expenses incurred in the day-to-day letting of the property. These can include expenses such as:

Landlords can also claim the Replacement of Domestic Item Relief. The relief allows landlords to claim for the replacement of items in a rental property, for example: furniture, furnishings, appliances and kitchenware. There is no relief available for the initial cost of domestic items purchased for a new or existing rental property, and the relief is restricted where a replaced item is also an 'improvement'.

In addition, as most of our readers will be aware, the tax relief on finance costs (such as mortgage interest) used to buy investment properties is gradually being restricted to the basic rate of tax. This restriction will be fully in place from 6 April 2020. In the current 2018-19 tax-year, the amount of higher rate tax relief on finance costs is restricted to 50%.

The furnished holiday let rules allow holiday lettings of properties that meet certain conditions to be treated as a trade, and therefore, qualify for a number of additional tax reliefs. These include: Capital Allowances for items such as furniture, equipment and fixtures as well as a number of valuable Capital Gains Tax reliefs.

It is more likely that commercial properties will be owned via a corporate structure. However, individuals that own and rent out commercial properties can claim plant and machinery capital allowances on qualifying assets.

If you are considering the purchase of your first investment property, of which ever type, it is worth considering your tax planning options before committing to the acquisition. Tax planning like holiday planning is best contemplated in advance to reduce any avoidable glitches. We can help.  

Bron: HM Revenue & Customs | 28-08-2018

Employees who use their own car at work can under certain circumstances be paid a tax-free allowance by their employers when using their own car, van, motorcycle or bike for work purposes. This is known either as Mileage Allowance Relief or a Mileage Allowance Payment. It is important to note that this tax-free allowance, does not include journeys to and from work but is relevant to employees who use their own vehicles to do other business-related mileage.

Employers usually make payments based on a set rate per mile depending on the mode of transport used. There are approved mileage rates published by HMRC. Where the approved mileage rates are used, the payments to employees are not regarded as a taxable benefit. Any amounts paid above the approved rates, must be reported on a P11D and are a taxable benefit for an employee.

Where an employer pays less than the published rates, the employee can make a tax claim for the shortfall using mileage allowance relief. For cars, the approved mileage allowance payment for the first 10,000 business miles is 45p per mile and 25p per mile for every additional business mile. An equivalent system at 20p per mile is available for bicycle travel and 24p per mile for motorcycle travel.

There is an additional 5p per passenger per business mile for carrying fellow employees in a car or van on journeys, which are also work related. Only payments specifically for carrying passengers count and there is no compensating relief if you receive less than 5p.

Bron: HM Revenue & Customs | 28-08-2018