From April 2019 businesses with a taxable turnover above the VAT threshold, currently £85,000, will have to keep their records digitally for VAT purposes and submit their VAT returns to HMRC through Making Tax Digital (MTD) compatible software.  This is part of HMRC’s vision to make the tax system more effective, more efficient and easier for taxpayers to get their tax right.

HMRC have issued a new ‘VAT Notice’ (700/22 – link below), which explains in more detail than before the changes and outlines how MTD will work from April next year.  They have also issued a ‘Stakeholder Communications Pack’ detailing the changes in a less formal manner, along with a list of software providers supporting MTD, links to both of these documents are also below.
 
If you have any queries regarding the changes, how these may affect you and how we can help, please contact us.
 
VAT Notice 700/22 - https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat

Stakeholder Communications Pack - https://www.gov.uk/government/publications/making-tax-digital-for-business-stakeholder-communications-pack/making-tax-digital-for-business-stakeholder-communications-pack

Software Suppliers supporting MTD - https://www.gov.uk/government/publications/software-suppliers-supporting-making-tax-digital-for-vat/software-suppliers-supporting-making-tax-digital-for-vat
​

It has previously been reported that the Enterprise Management Incentive scheme State Aid approval lapsed on 6 April 2018. HMRC had warned that EMI share options granted in the period from 7 April 2018 until EU State Aid approval was received may not be eligible for the tax advantages afforded to option holders but has now confirmed the scheme will operate as before.

On 15 May EU approval was granted and HMRC has now confirmed that the Enterprise Management Incentives scheme will continue to operate as before and no changes have therefore been made to the scheme.

The Enterprise Management Incentive (EMI) allows selected employees (often key to the employer) to be given the opportunity to acquire a significant number of shares in their employer through the issue of options. An EMI can offer significant tax advantages as the scheme allows options to be granted to employees which then allows shares to be acquired without any tax bill arising until the shares are sold.
​
Internet link: GOV.UK bulletin

HMRC proposes to introduce new VAT rules for construction services which are subject to consultation.
HMRC has published a draft statutory instrument for technical consultation together with a draft explanatory memorandum and a draft tax information and impact note.

Under the draft legislation supplies of standard or reduced-rated construction services between construction or building businesses will be subject to a domestic reverse charge. This means that the customer will be liable to account for VAT due, instead of the supplier.
The legislation will not apply to specified supplies made to customers who are consumers, or to those that use specified supplies to make other supplies, such as those selling new houses.

The legislation is expected to take effect from 1 October 2019. More details of the proposed new rules can be found at the following link.
Internet link: GOV.UK consultation

HMRC has extended the payroll Real Time Information (RTI) late filing easement until April 2019.

Under RTI payroll obligations employers must submit details of payments made to employees on or before the day that wages are paid via a Full Payment Submission.

The updated guidance extends the easement, introduced in April 2015 to April 2019. The easement applies where an employer’s FPS is late but all reported payments on the FPS are within three days of the employees’ payday. This easement applies from 6 March 2015 to 5 April 2019. However, HMRC go on to clarify that employers who persistently file after the payment date but within three days may be contacted or considered for a penalty. Potential monthly penalties range from £100 to £400 depending on the size of the employer.

​Please contact us for help or advice with payroll matters.
Internet link: GOV.UK PAYE guidance