Changes in VAT rates for hospitality traders
The temporary reduced rate of VAT (5%), introduced to assist qualifying hospitality trades disrupted by COVID lockdown measures, was increased to 12.5% on 1 October 2021. Based on present information, from 31 March 2022, this 12.5% rate will revert to the 20% standard rate.
Businesses that manage their own accounts software will need to change the VAT settings to include the new 12.5% rate, and make sure that this new rate is applied to all relevant taxable sales from 1 October 2021, in place of the temporary 5% rate.
Affected businesses will also need to consider the effects of this change on their selling prices to customers.
If you decide to maintain the VAT inclusive price that you charged when the 5% VAT rate applied, the increase in VAT to 12.5% will lower your profit margin.
If you decide to pass on the VAT increase to your customers, you may experience a drop in demand for your services.
Self-assessment tax deadline approaching
There are still two ways to submit your self-assessment tax return.
Most taxpayers chose to file electronically, and if we file your tax return, this is the way we would file on your behalf. If you do file electronically, the filing deadline for the 2020-21 tax year is 31 January 2022.
But there are still taxpayers that prefer to fill out a paper return. If this is your preference, please note that if your 2020-21 self-assessment tax return is still not filed, you have missed the filing deadline (31 October 2021). You have two options, to minimise penalties: complete and submit the outstanding return asap or complete and submit the return online. If you need help switching to the electronic filing option, please call, we can help.
In a recent press release, HMRC were at pains to remind taxpayers that this year, they will also have to declare if they received any grants or payments from COVID-19 support schemes up to 5 April 2021. These grants are taxable, including:
- Self-Employment Income Support Scheme,
- Coronavirus Job Retention Scheme,
- other COVID-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme.
Company filing dates
In most cases, the statutory filing date for a Corporation Tax return is twelve months after the end of the relevant accounting period.
HMRC considers reasonable excuse to be something that stops a company from meeting a tax obligation despite them having taken reasonable care to meet that obligation. HMRC will consider what a reasonable person, who wanted to meet their obligation, would have done in the same circumstances.
Whether a company has a reasonable excuse will depend on the circumstances in which the failure occurred. What is a reasonable excuse for one company may not be a reasonable excuse for another company.
The company must remedy the failure to file as soon as it can reasonably be expected to do so after the excuse has ended.
HMRC have published examples off what might be considered a reasonable excuse. They include:
- One director runs the company, and he (or an immediate family member) dies or suffers a sudden and serious illness close to the filing date. Alternatively, the director has a prolonged and serious illness throughout much of the return period.
- Unavoidable and unexpected absence abroad of the responsible director close to the deadline because of business commitments or domestic emergency.
- Accidental destruction of the records through fire or flood.
Budget 27 October 2021
We now know the Chancellor’s preferred strategy for plugging any hole in the UK’s finances is by tweaking taxation and using the proceeds to pay-back government borrowings.
Various government departments will also need to tighten their departmental belts to reduce government expenditure.
When we’ve had time to consider the effects of the announced budget changes, we will be highlighting any new ideas to make best use of any tax changes in the coming issues of this newswire.
Tax Diary November/December 2021
1 November 2021 - Due date for Corporation Tax due for the year ended 31 January 2021.
19 November 2021 - PAYE and NIC deductions due for month ended 5 November 2021. (If you pay your tax electronically the due date is 22 November 2021.)
19 November 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 November 2021.
19 November 2021 - CIS tax deducted for the month ended 5 November 2021 is payable by today.
1 December 2021 - Due date for Corporation Tax payable for the year ended 28 February 2021.
19 December 2021 - PAYE and NIC deductions due for month ended 5 December 2021. (If you pay your tax electronically the due date is 22 December 2021)
19 December 2021 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2021.
19 December 2021 - CIS tax deducted for the month ended 5 December 2021 is payable by today.
30 December 2021 - Deadline for filing 2020-21 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2022-23.