VAT notes – new edition published

HMRC has published what appears to be the final online quarterly edition of VAT notes which includes a summary of recent changes to the VAT rules. HRMC has confirmed that from January 2019 ‘VAT Notes’ will no longer be published online as VAT updates are published in real time on GOV.UK. The small number of businesses that are exempt from online filing will continue to receive a printed version of the VAT Notes with their quarterly paper returns. 

The main topics covered in the latest edition are as follows:

  • Small supplies of digital services to consumers in the EU. A new threshold to determine the place of supply of digital services to private consumers comes into effect from 1 January 2019. This will allow UK businesses whose total supplies of digital services to consumers across the EU is less than €10,000 (£8,818) to account for VAT in the UK rather than accounting for VAT in the country where their customers are located. Businesses below this threshold will continue to be able to use the current rules if preferred.
  • Fulfilment House Due Diligence Scheme. The new Fulfilment House Due Diligence Scheme opened for online applications on 1 April 2018. Businesses that store any goods imported from outside the EU on behalf of others need to apply for approval from HMRC before it can be registered for the scheme. Businesses that only store or fulfil goods that they own, or only store or fulfil goods that are not imported from outside the EU, are not required to register. There are penalties and the possibility of criminal convictions for late applications. Businesses risk having goods seized and will not be able to continue trading legally if they have not been approved by HMRC from April 2019.
  • VAT repayments. HMRC is reminding businesses that are due a VAT refund that the money can be paid straight to their bank account. To receive repayments electronically you need to provide HMRC with your bank details which must be in the name of the registered person or company. It can take up to 14 days for the payment to be shown in the bank account.
  • A summary of new and revised VAT notices.

HMRC has published the latest quarterly edition of VAT notes which includes a summary of recent changes to the VAT rules.

The main topics covered in the latest edition are as follows:

  • VAT Mini One Stop Shop (MOSS) – The new place of taxation rules for supplies of cross border telecommunications, broadcasting and e-services to consumers (B2C) came into effect on 1 January 2015. This change means that businesses who supply these services have to register for VAT in every EU Member State where they have customers. To save the need for businesses affected by these changes to register for VAT in other Member States, a MOSS return can be used. The first VAT MOSS return will cover the period 1 January – 31 March 2015 and must be completed online. The first return must be filed by 20 April 2015.
  • Alcohol Wholesaler Registration Scheme (AWRS) – A new scheme is being introduced to tackle alcohol duty fraud by introducing a register of businesses that wholesale alcoholic drinks. Under legislation introduced in Finance Bill 2015 businesses will need to apply to register for AWRS between 1 October and 31 December 2015, or be at risk of trading illegally. From April 2017, it will become an offence for a retailer to buy alcohol from an unregistered wholesaler.
  • A summary of new and revised VAT notices.
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Case Studies

The Tax Man

Minimise the stress of an investigation and make use of our extensive experience in securing best outcome for our clients

Business Valuation in Distress

Take advantage of our impartial and rigorous due diligence procedures

FD in The Cupboard

Our innovative ideas are here to improve your business performance and secure appropriate and cost effective funding

The Tax Man

The Tax Man

A new client was introduced to us via a recommendation with whom we arranged to meet on a regular basis in order to determine a number of changes that we felt were needed to their business structure. The client was at the time operating as a husband and wife partnership. The business was flourishing and had a number of large contracts with big organisations.

At the start of the process they were still heavily immersed in their day to day operations so we can get a full flavour for their ambitions, aspirations and growth plans. We quickly recognised there were sufficient tax savings which can be achieved by changing the structure from a partnership to a corporate entity. We carried out a business valuation and disposed of the goodwill from the old to the new business. Unfortunately, as often is the case with efficient tax planning, HMRC got involved and disputed our valuation.

An HMRC investigation can be a very stressful time for any client, even for those best prepared. However, our client had minimal input in the HMRC communication as we dealt with this professionally behind the scene. As an added benefit, our client could rest on the security that all work was covered by insurance and therefore all costs and time in dealing with this enquiry were covered by the fee protection policy we had put in place.

The initial approach taken by HMRC was very aggressive and they tried to present an argument that there was no goodwill in the business. We challenged HMRC’s view that the goodwill was worthless. After lengthy correspondence and numerous telephone calls, HMRC agreed 100% with our original valuation, which preserved our original tax saving plan for the client. Tax savings on this case where in the region of £75K at the outset, with ongoing savings of £6,000 per annum. We are pleased to add another happy client to our portfolio.

Business Valuation in Distress

Business Valuation in Distress

Selling a business is never an easy process, but when disputes arise, the need for a reliable third party due diligence process is even greater.

Tearle & Carver have extensive understanding of the requirements for remaining objective when managing a potentially difficult company buyout. In one such case, we were approached by the courts to act as independent accountant for an acrimonious business sale in which one partner was exiting the business and selling shares to the other. Given the circumstances, both sides had totally polar views of what their business was worth.

After arranging an initial meeting with the company, we were thorough in ensuring we completed due diligence, validating the figures in the accounting records, carrying out adjustments where appropriate, and drafting a set of reliable management figures within the framework required by the court.

A draft version of the report detailing our findings and conclusions was submitted to both parties, giving them the opportunity to voice any queries or concerns and ensure all relevant factors had been taken into account.

Through this process, we were able to submit a final report to the courts that was both binding and acceptable to both parties, effectively resolving what could otherwise have been a time consuming and costly process for all sides.

FD in The Cupboard

FD in The Cupboard

For smaller companies, it is often not possible or cost effective to pay for a full-time Financial Director.
Many of our clients therefore make use of Tearle & Carver’s extensive expertise to provide the services of an FD as and when required.

In this case, we were approached by the management team of an organisation looking to acquire the existing business via an MBO (Management buy out). Their business plan had proved ineffective for securing funding, and what they needed was financial expertise from someone with a developed understanding of the company’s internal workings.

Tearle & Carver helped deliver the solution our clients were looking through utilising our bank contacts in order to make the MBO viable, while also building a robust business plan and preparing our client for the rigorous vetting process. To help with cash flow issues, we introduced factoring which led to improved cash flow management.

We advised on the appropriate business valuation and structure, and continued to prepare monthly accounts to track profgress once the management were fully in command of all the information they needed to move their business forward.

In order to best assist these clients through the crucial first year of ownership, we attended board meetings on a regular basis, a service that we continue to provide to date.

With our continually developing understanding of their business, this client is able to remain confident that Tearle & Carver can provide any financial support they may need, now and in the future.