From 1 March 2021, if your VAT-registered business provides certain supplies of construction services to another business you may no longer need to charge them VAT. This is because your customer may need to account for it under the new domestic reverse charge for construction services.
Complicated new VAT rules post-Brexit are causing big headaches for both importers and exporters - and with a change in the system unlikely to happen, businesses are going to have to get to grips with the new VAT regime or else stop trading with the EU.
Until 31 December 2020, businesses making supplies of certain services (such as legal, financial or accountancy services) to non-business customers based outside of the EU were not required to charge VAT, as these services were deemed to be outside the scope of UK VAT.
At the height of the first Coronavirus lockdown HMRC announced that you would be able to defer your VAT liabilities due between the period of 20 March to 30 June 2020 until 31 March 2021.
The original method of filing VAT returns in Xero is changing soon and we are assisting our clients to be ready for this.
In the latest of our series of weekly Brexit Blogs, Rob Geary explains how Brexit will result in changes to VAT rules which will affect any business importing or exporting goods.
‘A recent first-tier tribunal case, Wickford Development Co Limited v HMRC, has been found in favour of the taxpayer, raising again the possibility of HMRC incorrectly interpreting the scope of the ‘Builder’s Block’, this being HMRC’s block on builders and contractors recovering input VAT incurred on goods that are not ‘building materials ordinarily incorporated in a building’.
Previously, HMRC guidance stated that when customers are charged early termination fees to withdraw from contracts, or payments are required for breach of contract, then these charges are not generally relating to a supply and are outside the scope of VAT.