Christmas / Brexit / CIS VAT
Merry Christmas and Happy New Year from all at NS24!
We hope you manage to enjoy the festive season despite the Covid restrictions.
Please note that our office will be closed from 4:30pm on Wednesday 23rd December returning on Monday 4th January 2021.
Before we leave for the holidays, I would like to highlight some key information to you.
At NS24 we have been undergoing numerous training courses regarding Brexit to establish how it will affect our clients’ businesses. Generally speaking, the greatest change we anticipate is around VAT treatment. The relevant VAT rates are changing and as such VAT returns will change after the 1st January, there are new VAT codes being introduced to facilitate this change.
Please note that if you export or import goods with the EU, you must ensure you have the correct paperwork in place in advance. If you do not already have one, you will need an EORI number to be able to export or import goods. The rules are different if you move goods through Northern Ireland and the EU to those moved directly between the UK and EU. Please ensure you have checked which rules apply to you and that you have the correct type of EORI number.
HMRC have a dedicated website regarding Brexit which is worth looking into – https://www.gov.uk/transition. It includes a personal checker to highlight relevant aspects to you. You can also sign up to receive updates by email. The checker is comprehensive and links you to guides relevant to your circumstances.
VAT for CIS Registered Businesses
In early 2021, the way VAT is deducted and paid to HMRC for CIS registered businesses is also changing. The change will require contractors to deduct the VAT from their VAT registered subcontractors before making their payments. In doing so, HMRC believe there will be less opportunity for fraud as well as reduced cash movements to and from HRMC.
For a VAT registered subcontractor, the sales invoice will be settled after CIS and VAT have been deducted. At present the VAT is paid and it is the subcontractors responsibility to submit VAT returns and pay the VAT to HMC. Going forwards the VAT reverse charge mechanism will be used instead which may put significant cashflow strains on businesses who rely on the VAT coming in before paying on to HMRC each quarter.
If you would like to know more details regarding the scheme please let us know.
We have sent regular updates regarding COVID-19 throughout the year, this will continue into 2021 where required.
We are all facing a very different Christmas this year but at NS24 we sincerely hope you manage to have a good one and return ready to face the challenges in the year ahead. Stay safe and have a Merry Christmas!