2021: VAT was the year VAT wasby
The close of the year is a good time to look back at what has been a very busy period for the nation’s favourite tax. What a year it has been in the land of VAT!
On 1 January 2021 A little thing called Brexit happened. Neil Warren and I covered all the important and useful changes in the Brace for Brexit series; a resource which is still valid and much used one year later.
Postponed Import VAT Accounting was also introduced, a brilliant idea but poorly explained by HMRC. But it was summarised in plain English, it all made sense.
We lost simplifications like triangulation, causing businesses in both the EU and UK equal amounts of confusion. Solutions are available, but these involve VAT registrations in the UK or EU; an added cost to businesses already suffering at that time with lockdown.
The Northern Ireland protocol, which I outlined in October 2021, was also there but not fully understood. As we approach the year end, both the UK and EU remain in tense talks to reflect on its implementation to date.
In brief, Northern Ireland is part of the EU where goods are stored in or pass through Northern Ireland – so all the pre-Brexit rules like triangulation and EC sales list continue to exist, but only for goods. For services, Northern Ireland is very much part of the UK as it is for all other aspects of the Union.
February 2021: Reduced rate ends
The temporary reduced rate of VAT for catering and hospitality (5%) was to end by 31 March 2021 but was extended until 30 September 2021; a much-needed relief to the sector hit hardest by the lockdowns.
March 2021: Domestic reverse charge
The domestic reverse charge (DRC) for construction services, was finally implemented, after much delay. Despite this long-awaited fraud measure going live, it still confused the sector and it still is confusing accountants and clients nine months later.
The key hurdle is to get the VAT treatment right (hard enough as it is) you have to get the CIS treatment right first. Two confusing taxes reliant upon each other was always going to cause issues.
Neil Warren wrote a wonderful series of six articles explaining the DRC rules.
July 2021: One stop shops
Import One Stop Shop and One Stop Shop finally went live after being delayed from January 2021.
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Jason has over 20 years’ experience working exclusively in indirect taxes (VAT, import duty, SDLT) with owner-managed businesses, corporates and not for profit sectors. He particularly enjoys challenging HMRC decisions, representing clients in tribunals or during inspections.
Experience includes land and property, partial exemption and...