Tag Archives: VAT

Are Your Properties Divided By Hadrian’s Wall?

shutterstock_213922042From 6 April 2016, the Scottish Parliament will have the power to set the rate of income tax for Scotland. This might be difficult for HMRC as it will likely cause some problems determining who qualifies as “Scottish”.

For income tax purposes, it will much depend on an individual’s residence status. The current proposal for determining the residency of an individual is the location of their sole or main residence.

If that isn’t clear cut, then a day counting test is proposed.  Anyone with homes in both Scotland and the rest of the UK or has close economic links to Scotland will need to understand the new rules when they are finalised later this year and ensure they know where they will be a tax resident.

Setting aside matters of national pride and focusing on the tax aspects, whether you want to be Scottish or not will depend on the respective rates of tax.

At this stage, we don’t know if income tax rates will be higher or lower than the rest of the UK, but new powers will allow Scottish Parliament to vary the income tax rate by up to 10% above or below the main UK rates.

It will also be interesting to see whether or not the Scottish Government will obtain further devolved tax powers to implement capital gains tax or inheritance tax changes.

For the rest of the UK, David Cameron has announced that there will be no VAT, national insurance or income tax increases for the next five years. For more information or if you need any guidance with your tax planning, please contact our tax team on 01254 679131 or email tax@pmm.co.uk.

HMRC Digitalises Services for Registered Charities

shutterstock_169711982It was only last month that HMRC released the VAT MOSS service online for suppliers of digital services to fulfil their tax obligations. HMRC is continuing its digital revolution with the release of a new online service for charities.

The online service will allow charities to register themselves, replacing the current ChA1 paper form. Although charities have been able to reclaim tax online since 2013, they would have had to go through the long process of submitting a paper form to register.

Charities can now register solely online by providing various details about themselves, along with supporting documentation. Registration using the paper ChA1 form will no longer be available although forms that have already been submitted but have yet to be processed will be considered by HMRC.

It would seem that HMRC are taking that step forward by moving away from paper one step at a time. The move toward digital should, in theory, improve customer service and efficiency when dealing with matters that may have historically taken a long time.

If you are a registered charity and would like advice on how these changes might affect you, please contact Helen Binns (Charity Specialist) on 01254 679131 or by email at helen.binns@pmm.co.uk.

Supplying Digital Services to Consumers in the EU

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If your business supplies digital services to consumers in other EU countries, you need to be aware of new VAT rules.

On 1 January 2015, HMRC put in place new ‘place of supply’ rules for VAT on the supply of digital services by businesses to consumers in the EU.

The new rules state that all supplies of telecommunications, broadcasting and e-services to consumers will be charged based on the rate of the location of the consumer, rather than the location of the supplier (as has previously been the case).

What is classed as a ‘Digital Service’?

•    The supply of television or radio programmes.

•    Fixed and mobile telephony, fax and connection to the internet.

•    Video on demand, downloaded applications (commonly known as ‘apps’), music downloads, gaming, e-books, anti-virus software and online auctions.

If your business supplies digital services to consumers in the EU, you will have a requirement to VAT register in each country in which your customers are located.  However, a streamlined process has been introduced by HMRC which allows you to avoid this.  Instead, you can register for HMRC’s new service called VAT MOSS (VAT Mini One Stop Shop).

Once you have registered for the MOSS service, each calendar quarter you submit a single MOSS VAT Return and single payment to HMRC. The relevant parts of the return and payment will then be forwarded to the member state(s) where the consumers are located. This fulfils your VAT obligations without the need for individual registrations in each country.

If you have not done so already, we recommend that you put the processes in place to comply with these new rules sooner rather than later. HMRC have warned that any business that does not comply with the new VAT rules will be excluded from using the MOSS service for 2 years and fined. This means excluded companies will have to register for VAT in each of the EU member states that they supply digital services to.

Supplying Goods to the European Union – Protecting Yourself from VAT Costs

shutterstock_118438642If you supply goods to other countries in the EU, you may or may not need to charge VAT on them. If the recipient is VAT registered in another EU country, generally speaking, such supply may be zero-rated, subject to the following conditions:

  • The recipient is based in an EU country.
  • The recipient is VAT registered in another EU country.
  • You get their VAT registration number, including the 2 letter country code, and include on sales invoices.
  • You obtain evidence of removal showing the goods have left the UK.
  • The goods are supplied and evidence of removal is obtained within 3 months.

It is essential that you check that the VAT registration number is genuine. This can be done easily on the European Commission website: http://ec.europa.eu/taxation_customs/vies/

Be aware, it is your responsibility as the supplier to check the authenticity of the information provided to you, and failure to do so could result in you being liable for the VAT involved. We have seen clients fall foul of this recently and it can be costly.

If you think you and your business could be affected by the above regulations, contact our tax team who will be more than happy to advise –  on 01254 679131.