Following Brexit on 31st December 2020, the rules relating to VAT for EU sales have changed.  Here’s how…

VAT liability
First we’ll look at ‘export of Services’.  These rules are different to exporting Goods as there is no general VAT relief for the export of services.   Services supplied within the UK may be exempt, zero-rated, standard-rated, or liable to VAT at a reduced rate.

You will need to work out who is liable for the VAT in order to determine how much VAT to charge on your service.  So first establish who is being supplied – Is it a business or a consumer?

The VAT treatment differs slightly for supplying to businesses (B2B) or consumers (B2C).

VAT for business to business services
‘Business to business’ or B2B simply means supplies made from your business to another business.

B2B services must follow existing place of supply (POS) rules.

So, if the POS is in the UK, standard VAT treatment applies. But if the POS is outside of the UK, it’s out of the scope of UK VAT.   Ie.  no UK VAT is chargeable where the place of supply is outside the UK

The general rule is that the service is supplied where the customer ‘belongs’ – either in the UK or outside of the UK. However, there are some exceptions to the following services:

• Land related services
• Transport hire
• Services linked to physical performance (e.g. artistic, cultural)
• Ancillary transport services
• Restaurant and catering
• Passenger and freight transport
• Intermediary services
• And B2C supplies of digital services (more detail later on this).

As is always the case with VAT Rules there is a lot of detail relating to the above exceptions so we would recommend you check the relevant VAT notice to get a bit more information on the specifics. Click the link to HMRC - VAT notice 741

Business to consumer services

‘Business to consumer’ or B2C services can mean you’re supplying to:

• A private individual
• A charity, government department or other body which has no business activities
• A ‘person’ (natural or legal) who receives a supply of services wholly for a private purpose

B2C services must also follow existing place of supply rules in exactly the same way as B2B services.

B2C electronic services

In the case of B2C electronic services, existing VAT MOSS (Value Added Tax: Mini One Stop Shop) users must now register with the non-union MOSS scheme in another EU country. Or alternatively, register for VAT in all countries in which you supply.

It’s important to note that you must register by the 10th of the month following your first supply.


Selling goods to the EU

When selling goods to the EU, you must do so at zero rate – as you would with sales to the US and other countries outside the EU.

To do this, you need to obtain an Economic Operator Registration and Identification Number (EORI number). You may also need to be registered for VAT in an EU country.

If you’re VAT registered, your EORI number will be an extension of your VAT number, but you do need to apply for an EORI number – click this link to complete the online form
​
There is a checker online to find out if you are EORI Registered EORI checker.

Buying goods from the EU

You will need to make a customs declaration, or your agent can do this for you.  You must have an EORI number.  Import VAT and duty will be due on all imports over £135. and can be dealt with on your own VAT Return.

You will be able to download a monthly statement which will detail the import VAT (similar to the current C79 form)  Your tax agent will not be able to access this; it can be found in your HMRC Business Tax online account. 

We are co-hosting a webinar on the 23rd March 2021 with Quickbooks looking at their Mobile App. 

Here is What You'll Learn
An Overview of the QuickBooks Mobile App
Learn to navigate around the QuickBooks app, and discover the biggest time-saving features
Insight into Reporting
Learn about some of the basic reporting that you can undertake using QuickBooks to gain a greater understanding of your business
Quick Invoicing & Quicker Payments
Learn how send invoices and estimates on the go, get paid quicker, and automate your payment reminders
Q&A
You'll have an opportunity to ask questions throughout the webinar, but we'll have a dedicated time for a Q&A at the end

If you deferred your VAT payment that would have been due from March to June 2020, and cannot afford to pay by 31st March 2021, you can now join the VAT deferral payment scheme, and pay the VAT owed over a longer period. 

Joining the scheme will allow you to make up to 11 monthly instalments, interest free. The earlier you join, the more months you will be able to spread payments across, so if you plan on joining, make sure you do so asap!  To use the online service, you must:

• join the scheme yourself, as your agent we cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by 21 June 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit 

Here is the link to HMRC website to join but if you have any questions or need a bit of assistance just let us know
​SCHEME OPENS 23RD FEBRUARY 2021

Domestic reverse charge VAT legislation is a change in the way CIS business handle and pay VAT.
It moves the VAT liability from the Supplier (subcontractor) of a service in the construction industry to the customer (contractor)
It comes in in the UK on 1st MARCH 2021.
The scheme is designed as an anti-fraud measure and intends to cuts down on 'missing trader' fraud, where companies receive high net amounts of VAT from their customers but have no intention of paying the VAT to HMRC.
You will be affected by this if you are a business involved in buying and selling construction services.  It does not apply to zero-rated supplied of construction services eg. new build dwellings. So for example if you are a plumbers, builder, joiner or electrician and you usually fall under the current CIS Tax Scheme then this will apply to you.

There are some quite specific conditions that must be met before applying the reverse charge.
When ALL of the following conditions are met then you must apply the reverse charge VAT rules...
1.Specified services - generally if it falls within CIS Scheme *See further info at the bottom of the page
2. Standard rated or reduced rate - 20% or 5% VAT  would usually be charged. 
3. You are VAT Registered
4. You are CIS Registered
5. The customer intends to make an onward supply of construction services to another party
The supplier and the customer must not be connected. 
Reverse charge does not apply if the customer has notified the supplier that they are an end user.(In writing!)

What is an End User?
For reverse charge purposed consumers and final customers are called end users.
They are businesses, or groups of businesses, that are VAT and CIS registered but do not make onward supplies of the building and construction suervices supplied to them. 

How does it work in practice?

example from a subcontractors point of view:
ABC Electrical is VAT registered, a subcontractor and supplies services and materials to their subcontract Colins Builders.
Under the new rules ABC Electrical issue a Sales Invoice to Colins Builders for only the NET VALUE of the goods and services and No Vat will be charged on their invoice.
The accounts software will have a code called 'Reverse Charge' to account for this.
Subcontractors may find they receive regular VAT repayments from HMRC

example from a contractors point of view:
Colins Builders receive a purchase invoice from ABC Electrical for goods and services. 
There is no VAT charged on the invoice.  There is a statement confirming 'Domestic Reverse Charge at 20% VAT on Income'  indicating that they must account for the output VAT on their VAT Return.  
The accounts software will have a specific code!  Colins Builders will pay the VAT on this invoice direct to HMRC, instead of paying to ABC Electrical.
As long as the correct VAT code is used within the accounting software the VAT will be input into the correct boxes on the VAT Return!
When the contractor is at the top of the supply chain their customer will be the End User. 
In the example above the Contractor Colins Builders is issuing their end user, Owens Developments plc with a sales invoice.

Because Owens Developments plc are the END USER, Colins Builders will issue the sales invoice in the normal way with standard 20% VAT.

DOWNLOAD HMRC FLOWCHART to help you decide whether DRC Rules apply - click the download link at the bottom of this page.

*Info - when do CIS Rules apply?
CIS rules generally define construction as building, making, assembling or putting together,
and its activities may include:

•Groundworks and preparation of site
•General building works like bricklaying, plastering, and roofing
•Electrical works and plumbing
•Painting and decoration works
•Maintenance and general repairs
•Demolition and dismantling works
•Erecting scaffolding structures
•Extending an existing building structure
•Landscaping and tree planting when done as part of a new housing development project
•Assembling of pre-fabricated housing units either on- or off-site and site facilities
•Assembling of parts of a prefabricated housing structure that is then transferred to a
    different site for final installation.
​

​Updates on the Coronavirus Job Retention Scheme
​HMRC have been called on by the Chancellor to urgently direct financial support to whered businesses need it most. The first wave of this is the launch of the Coronavirus Job Retention Scheme.

Claims should not be made by phone, it will be an online service.

The Coronavirus Job Retention Scheme (CJRS)

In response to the coronavirus pandemic, the Chancellor announced a series of measures to support businesses and their employees. One of those measures is the CJRS, that allows employers to claim 80% of the wages of staff (up to a maximum of £2,500 per employee) that they have furloughed (been put on temporary leave).
HMRC is working at pace to deliver the service that will allow businesses to make a claim.
Businesses and Agents that are authorised to act on behalf of clients for PAYE matters, will be able to claim. 

Service launch - the scheme should be ready to launch on 20th April 2020. 
 
Businesses will need the following information on each of their furloughed employees:

• National Insurance number
• salary, National Insurance and pension contribution information that allows business to calculate the claim amount.

If we are your Agent then we will go through this process for you - as soon as we are made aware that the process is ready to begin then our payroll team will submit claims for those staff that you have advised are to be furloughed.  We will liase with you before submission is made.

HMRC are asking that you do not ring them with a query, get in touch with us preferably via email and we'll get back to you as soon as we can. 

The latest guidance on CJRS can be found on GOV‌.UK by searching for 'Coronavirus Job Retention Scheme'.
HMRC will also be providing you with further information on our support for businesses and workers over the coming weeks, including more detail on the Coronavirus Self Employment Income Support Scheme.
We would like to thank you for your help to businesses at this time of national need. HMRC is working day and night, prioritising the need to get the financial support out to those who need it.

A furloughed employee is one who has been given a temporary leave of abscence due to the needs of an employer.   This means a furloughed worker can return to work in the future and will get paid.  The salary payment  could be at 80% which the government are covering and it is up to the employer if they wish to cover the 20% to make up the salary. 

The  scheme is said to be going to run for 3 months from 1st March but they may potentially extend it.  The maximum amount of time a worker can be furloughed is one year.

Specific Covid-19 plans..

If an employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of staff wages, to avoid redundancies.

If an employer intends to access the Coronavirus Job Retention Scheme, they will discuss with staff becoming classified as a furloughed worker. This would mean that employees are kept on the payroll, rather than being laid off.

To qualify for this scheme, employees should not undertake work for the employer while they are furloughed. This will allow the employer to claim a grant of up to 80% of  wages for all employment costs, up to a cap of £2,500 per month.

As a payroll service provider we will be keeping you up to date with the latest developments and hope to find out exactly how to apply very soon.
​

​Certifying absence from work
By law, medical evidence is not required for the first 7 days of sickness. After 7 days, employers may use their discretion around the need for medical evidence if an employee is staying at home.
We strongly suggest that employers use their discretion around the need for medical evidence for a period of absence where an employee is advised to stay at home either as they are unwell themselves, or live with someone who is, in accordance with the public health advice issued by the government.
If evidence is required to cover self-isolation or household isolation beyond the first 7 days of absence then employees can get an isolation note from NHS 111 online or from the NHS website.
What to do if an employee needs time off work to look after someone
Employees are entitled to time off work to help someone who depends on them (a ‘dependant’) in an unexpected event or emergency. This would apply to situations related to coronavirus (COVID-19). For example:

• if they have children they need to look after or arrange childcare for because their school has closed
• to help their child or another dependant if they’re sick, or need to go into isolation or hospital

There’s no statutory right to pay for this time off, but some employers might offer pay depending on the contract or workplace policy.

The Self Employed 
Every self-employed person can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees
 https://www.understandinguniversalcredit.gov.uk/coronavirus/
 
Support for individuals 

• the Universal Credit standard allowance has been increased, for the next 12 months, by £1,000 a year.  
• the Working Tax Credit basic element has been increased, for the next 12 months, by £1,000 a year.  
• increasing housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30% of market rents in your area.  
• The self-assessment tax payments due on 31st July 2020 will be deferred until January 2021. No penalties or interest for late payment will be charged in the deferral period.  
• Sick pay o You can get £94.25 per week Statutory Sick Pay (SSP) if you’re too ill to work. It’s paid by your employer for up to 28 weeks.
  • If you are staying at home because of COVID-19 you can now claim SSP. This includes individuals who are caring for people in the same household and therefore have been advised to do a household quarantine.
  • To check your sick pay entitlement, you should talk to your employer, and visit the Statutory Sick Pay (SSP) page here for more information: https://www.gov.uk/statutory-sick-pay  
• SSP start date o SSP to be paid from day 1, rather than day 4, of your absence from work if you are absent from work due to sickness or need to stay at home due to COVID-19. Once the legislation has been passed, this will apply retrospectively from 13 March. You should talk to your employer if you are eligible for SSP and need to claim.  
• Proof of sickness - If you have COVID-19 or are advised to stay at home, you can get an ‘isolation note’ by visiting NHS 111 online, rather than visiting a doctor. For COVID-19 cases this replaces the usual need to provide a ‘fit note’ (sometimes called a ‘sick note’) after 7 days of sickness absence.  
• If you are not eligible for SSP – for example if you are self-employed or earning below the Lower Earnings Limit of £118 per week – and you have COVID-19 or are advised to stay at home, you can now more easily make a claim for Universal Credit

 
https://www.understandinguniversalcredit.gov.uk/coronavirus/ or new style Employment and Support Allowance.
​https://www.gov.uk/guidance/new-style-employment-and-support-allowance

• If you are eligible for new style Employment and Support Allowance, it will now be payable from day 1 of sickness, rather than day 8, if you have COVID-19 or are advised to stay at home. 

Coronavirus Job Retention Scheme

• All employers will be eligible for the scheme.  
• Employers will be able to contact HMRC for a grant to cover 80% of the salary (up to a total of £2,500 a month) of an employee who is not working but is furloughed and kept on the payroll, rather than being laid off.  
• Employers can top up salaries further if they choose to.
  
• The Scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months (to be extended if necessary).  
• To access the Scheme you will need to:
• designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. To qualify for this scheme, the employee should not undertake work while they are furloughed  
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)  
• HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement; we will let everyone know how this process will work as soon as we do!

It is thought that the first grants will be paid within weeks, with the aim of getting it done before the end of April.  
Coronavirus Business Interruption Loan Scheme 
• A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
• The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
• Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
• You are eligible for the scheme if:

• your business is UK based, with turnover of no more than £45 million per year

• your business meets the other British Business Bank eligibility criteria
•  The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website here : https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
• All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.  
• You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. If you need help with this then please get in touch. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.  
• The scheme will be available from early next week commencing 23 March.  

VAT Payments 

• VAT payment deferral, for all UK businesses will apply from 20 March 2020 until 30 June 2020.  
• This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.  
• Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. 

Sick Pay 

• Small-and medium-sized businesses and employers will be able to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows: o your business is UK based
  • your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020
  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website.
  • The eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force.
  • The government will work with employers over the coming months to set up the rebate mechanism for employers as soon as possible.

Business rates holiday for retail, hospitality and leisure businesses 

• A business rates holiday is introduced for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. See our separate document on what businesses are included in this definition.  
• Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.  
• You are eligible if:  
• Your business is based in England
• Your business is in the retail, hospitality and/or leisure sector.  
• Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest & boarding premises and self-catering accommodation
  • Please ask for our detailed document on what exact businesses are included in these definitions.  
• There is no action required to access this scheme. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.  
• You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator here - https://www.gov.uk/calculate-your-business-rates  
• Further guidance for local authorities is available in the expanded retail discount guidance here : https://www.gov.uk/government/publications/business-rates-retail-discount-guidance

 
Cash grants for retail, hospitality and leisure businesses 

• The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.  
• For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. 
• For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.  
• You are eligible for the grant if:
  • your business is based in England
  • your business is in the retail, hospitality and/or leisure sector  
• Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation.

 

• You do not need to do anything to access this scheme. Your local authority will write to you if you are eligible for this grant.  
• Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.  
• Find your local authority here: https://www.gov.uk/find-local-council

 
Support for businesses that pay little or no business rates 

• The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief.
• This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
• You are eligible if:
  • your business is based in England
  • you are a small business and already receive SBBR and/or RRR you are a business that occupies property.
• You do not need to do anything to access this scheme. Your local authority will write to you if you are eligible for this grant.

 
Support for larger firms through the COVID-19 Corporate Financing Facility 

• Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.  
• This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities.  
• It will also support corporate finance markets overall and ease the supply of credit to all firms.  
• All UK businesses are eligible.  
• The scheme will be available early in week beginning 23 March 2020.We will provide information on how to access the scheme here shortly. More information is available from the Bank of England here : https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020

 
Support for businesses paying tax: Time to Pay service 

• All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.  
• These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.  
• If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.  
• If you’re worried about a future payment, please call HMRC nearer the time.

Insurance 

• Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.  
• Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.