Your bumper guide to the changes affecting accountants and their clients in 2021

28th Jan 2021
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There are many changes affecting accountants and their clients in 2021. As the new year dawned, accountants braced for a year of changes. Between Britain’s long-awaited EU exit, changes to VAT100, the end of the Making Tax Digital soft landing period, and continuing Coronavirus support, this year is shaping up to be a busy one.

Take a look at our bumper guide to the changes affecting accountants and their clients in 2021.

Go to Brexit
Go to Making Tax Digital
Go to Coronavirus support

Brexit

Brexit 2021 changes affecting accountants

Will compliance change now we’ve left the EU?

When it comes to GDPR, UK rules don’t change. Although the country is no longer governed by the EU legislation, ICO.org.uk explains that the rules have been incorporated into UK data protection law from 1st January. More on eSigning here

Can you find additional clients in the EU post-Brexit?

Interestingly, the share of accountants’ revenue generated by clients in the EU is just 4.2% (ICAEW), so the short answer is that you probably won’t see a huge uptick in EU clients now the UK has left.

What it does mean is that should a slice of that market call on your practice for help, you need to be able to cater to these brand new clients in the most cost-effective way possible. They’ll need your expert advice and your compliance knowledge, so set your fees accordingly.

What about double taxation?

For your clients with UK/EU parent and subsidiary companies, there is likely to be confusion around double taxation rules with the EU member states. Simmons + Simmons explains, “As such, the UK's double taxation agreements may become increasingly significant following Brexit given that the UK has concluded double taxation agreements with all present EU Member States.” However, this is a complex scenario with multiple countries involved – you can read the full Brexit Tax feature here.

Import VAT: an opportunity for accountants

One area that will be likely to see an increase in work for UK accountants is in the realm of rules surrounding trading goods with businesses and consumers in the EU.

Those rules are complex and mark a departure from how trading with the EU worked before Brexit. For accountants, there is likely to be opportunities around VAT related to Making Tax Digital due to the combination of small businesses joining the scheme and a requirement to account for VAT on exports and imports to and from the EU.

Get an overview of the changes here.

Making Tax Digital

Making Tax Digital

Changes to Making Tax Digital in 2021 are another area for accountants to be aware of. HMRC’s rollout of their digital transformation plan continues with bringing small businesses into MTD for VAT, the pilot of ITSA and the open consultation on MTD for Corporation Tax.

The end of VAT100

Although small businesses have until April 2022 to join Making Tax Digital, HMRC has also announced that the old VAT100 system will be transitioned to Making Tax Digital over the coming months. This change will be completed in April 2021. The practical implication of that transition is that the old VAT100 method to file returns will become unavailable and Making Tax Digital for VAT software will necessary for any VAT registered business.

Find out how BTCSoftware is making the transition simple for accountants.

MTD for Income Tax Self-Assessment

The Chancellor’s measures to assist self-employed individuals who have been negatively impacted by the pandemic have a knock-on effect on the MTD for ITSA pilot. And with the fourth round of SEISS coming soon, this effect could be felt right up until the next income tax deadline in January 2022. That’s because any individual who has been paid a grant is unable to join the pilot, giving accountants just a year to prepare those clients ahead of mandation in April 2023.

BTCSoftware’s CFO, Ian Katté, answered accountants’ Making Tax Digital for ITSA questions on our blog. 

Further Coronavirus relief due

Further Coronavirus relief due

In his budget statement in March 2020, Rishi Sunak described COVID-19 as a “temporary disruption to the economy”. Nearly a year later, most elements of the £30bn stimulus package are still in place, well beyond their planned October 2020 end date. The published National Audit Office data (last updated in August 2020) suggests that the SEISS and CJRS combined were expected to come in at £10.1bn over their initial estimated cost.

SEISS

The window to claim a grant in the third round of SEISS closes today. It’s worth 80% of average monthly trading profits, capped at £7,500, to cover three months of profits. Unlike the first and second grants, this one is to be reported on the 2020/21 tax return.

At this point, the details of the fourth grant – due to cover February to April 2021 – have not been released. Rebecca Cave reports on the news that no official announcement is expected until the budget statements on 3rd March.

Furlough

On 26th January, HMRC added further information to inform businesses about claim data that will be publicly available from February. The next published claim data will additionally include:

  • an indication of the value of the claim within a banded range
  • the company number - for companies and Limited Liability Partnerships

Additionally, the CJRS has been extended until 30th April 2021. The deadline to claim furlough days in January 2021 is 15th February 2021.

The window to claim for periods ending on or before 31st October 2020 is closed.

VAT

For those who deferred VAT in 2020, there is still no update to HMRC’s guideline of opening the opt-in process to allow instalment payments in “early 2021”. Agents should be aware that their clients must opt-in; this cannot be done by the agent. 

The reduced rate of VAT for hospitality and tourism businesses is currently scheduled to end on 31st March 2021. With Mr Johnson planning to publish his lockdown exit plan in mid-February and the budget statement due on 3rd March, however, there could be scope to extend this relief further to support one of the hardest-hit sectors in the UK.

How BTCSoftware helps accountants

With our long-standing relationship with HMRC, BTCSoftware customers are always assured of rapid deployment of updates to our software in response to changes.

When the SEISS was first announced, our fantastic development team worked to update PM Solution with additional reporting to support accountants in identifying eligible clients.

And our MTD for VAT software was designed from the very beginning to work for accountants with VAT clients at all levels, including those that are now impacted by the VAT100 switch off.

We also include full access to our knowledgeable support team in the cost of the software licence, which means no sneaky upcharges should you need a helping hand.

Find out more

Our friendly and knowledgeable sales team is available on 0345 241 5030. Or, book your demo here.

New webinar added

To register for our Integrated Software webinar on Thursday 11th February, click here.