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Thursday 4th March 2021 at 10am
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posted: 04 February 2021
VAT Domestic Reverse Charge For Builders will be effective from 1 March 2021.
To be eligible all of the following need to apply:
- The work is subject to CIS and both the subcontractor and contractor are registered for CIS
- The subcontractor is VAT registered
- The contractor is VAT registered
- The work is subject to the standard rate or reduced rate of VAT
- The work relates to the onward supply of construction services
Most subcontractor builders will need to move to monthly VAT returns to minimise the cash flow impact. Burgess Hodgson will be in touch to arrange this with respective clients, if you are unsure if this could effect you please get in touch with your usual Burgess Hodgson contact.
The subcontractors sales invoice must show the VAT that would be payable and the words “Reverse charge – customer to pay the VAT”.
Subcontractors should check that the contractors they are working for are VAT registered annually using HMRCs VAT checking service.
The cash accounting scheme does not apply to this – contractors should include invoices from subcontractors based on invoice date, irrespective of whether they have been paid.
The VAT Domestic Reverse Charge For Builders is excluded from the Flat Rate Scheme (FRS) – the sales are not included in the box 6 total. Therefore subcontractors should consider coming out of the FRS, otherwise they will not be getting any implied VAT recovery for materials and overheads. Where subcontractors come out of the FRS, there is the opportunity for a VAT recovery if their stock holding has increased during the period they have been in the FRS – e.g. if stock was £5k when they joined the FRS but is now £10k, they can recover input VAT on the increase of £5k. There is not a corresponding liability if their stock holding has reduced – it is a one way win.
Subcontractors cannot split their sales invoices between labour and materials to get around this.
Contractors are not allowed to recover input VAT if it has been incorrectly charged. They must only pay the net and request a corrected invoice. Contractors will include the VAT inbox 1 and box 4 of the VAT return. In most cases this will be neutral unless there is a restriction on the box 4 recovery – perhaps partial exemption or some element of private work.
If you think this could effect you or if you have any questions please either contact your usual Burgess Hodgson Contact or email firstname.lastname@example.orgRead More
Marion Youngman has sadly passed away.
Marion joined the firm in the 1960’s in London and moved down to Canterbury with Len Hodgson, Colin Slater and Steve Sutton (Senior Partner). She headed up our Company Secretarial department as well as Payroll, Vat, small accounts and Tax. Marion was very adaptable, immensely accurate and incredibly helpful to BH in those early years of establishing the firm in Canterbury.
She retired in 1998 to enjoy walking, badminton and spending more time in her garden in Shepherdswell and we enjoyed catching up with her every year at our Christmas do’s. Marion was always so delighted to be a part of our Annual BH Celebrations and enjoyed catching up with friends old and new.
Marion’s husband John died in 1972 and leaves behind two sons: Neil and Anthony and two granddaughters Rebecca and Evelyn. Our condolences have been sent to the family.Read More
Posted: 26 January 2021
The Treasury Direction has been published, setting out the legal basis for the extension of the furlough scheme from 1 February to 30 April 2021.
The link also contains previous Directions, with explanatory notes. The first document in the link is the latest, the Direction dated 25 January 2021.
The latest Direction sets out the changes to the calculations of “reference salary” and “usual hours”, as the scheme will be over a year old at its conclusion.
“On 25 January, the Chancellor made a Treasury Direction under Section 71 and 76 of the Coronavirus Act to extend the effect of the Coronavirus Job Retention Scheme (CJRS).
The Direction sets out that HMRC are responsible for the payment and management of amounts to be paid under the scheme. The schedule to this direction sets out the scheme applying for the period beginning on 1 February 2021, and ending on 30 April 2021.
Due to the overlap with the CJRS that was introduced in March 2020, this Direction modifies the rules to calculate the reference salary and usual hours.”
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Posted: 25 January 2021
Self Assessment customers who cannot file their tax return by the 31 January 2021 deadline will not receive a late filing penalty if they file online by 28 February.
For more information visit: www.gov.uk/government/news/no-self-assessment-late-filing-penalty-for-those-who-file-online-by-28-february
For help with your tax return email: firstname.lastname@example.orgRead More
Posted: 18 January 2021
The long-running case on whether insurance policies for business interruption cover include circumstances arising from the Coronavirus outbreak has been decided in favour of the policyholders:
The circumstances will vary depending upon the nature of the business and the particular insurance policy wording – some will have a claim, some will not:
Tens of thousands of small businesses will receive insurance payouts covering losses from the first national lockdown, following a court ruling.
The Supreme Court found largely in favour of small firms receiving payments from business interruption insurance policies.
For some businesses it could provide a lifeline, allowing them to trade beyond the coronavirus crisis.
The ruling could cost the insurance sector hundreds of millions of pounds.
The City watchdog, the Financial Conduct Authority (FCA), brought the test case, with eight insurers agreeing to take part in proceedings.
Please contact us at email@example.com with any questions. If you could be affected, we suggest discussing your position with your insurance broker to see if you have a claim.Read More
Posted: 05 January 2021
‘Businesses in the retail, hospitality and leisure sectors are to receive a one-off grant worth up to £9,000, the Chancellor has announced.’
For more information visit: www.gov.uk/government/news/46-billion-in-new-lockdown-grants-to-support-businesses-and-protect-jobs
Contact us at firstname.lastname@example.orgRead More
Posted: 22 December 2020
HMRC have confirmed they will not extend the filing deadline for the submission of 19/20 Self-Assessment Tax Returns in the wake of the pandemic. Tax Returns remain due for submission by 31 January 2021 and late filing penalties will be issued automatically for Returns submitted after that date.
With our clients’ assistance we aim to submit all Returns within the deadline to avoid any penalties arising.
HMRC have however confirmed that they will accept pandemic-related personal or business disruption as a reasonable excuse and will provide additional time for appeals to be made against automatic penalties.
It should be noted that submission of a Tax Return after the 31 January 2021 deadline will extend the period in which HMRC can review a Return and may make a review more likely.
We would be happy to assist with any Tax Returns or penalty appeals, should you be unable to make the filing deadline.
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Posted: 17 December 2020
Furlough, self employed and loan schemes have been extended and the Budget date announced.
See the latest press releases at:
- Furlough scheme extended in substantially its current form to end April 2021 – the planned January review of the employer contribution will now not happen, the scheme will be unchanged (see extract below). The final details of this and the legislation are awaited, to see if there are any other amendments.
- Self employed scheme also to be extended to end April 2021
- Bounce back and CBILs loans now available to end March 2021
- Budget date set for 3 March 2021
“The Chancellor said he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.
The government will continue to pay 80% of the salary of employees for hours not worked until the end of April. Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.
The Chancellor said he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.
The government will continue to pay 80% of the salary of employees for hours not worked until the end of April. Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.”
Self employed scheme:
“The furlough and loan schemes are part of the government’s wider plan to support, create and protect jobs through its Plan for Jobs. This includes the Kickstart Scheme, more investment in training and skills as well as the Self Employment Income Support Scheme grant, with a fourth grant being made available from February to April 2021.”
“The government has already announced that more support will be available beyond March, through a successor loan scheme. More details of the scheme will be announced in due course, with the government providing a further update on wider Covid-19 economic support at the Budget on 3 March.”
If you have any questions on this please email firstname.lastname@example.orgRead More