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2021: What to expect in tax

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The horrendous year of 2020 is behind us, so what do you need to prepare for in 2021? There will be Brexit, Budgets, and new VAT rules on top of all the usual compliance challenges.

4th Jan 2021
Tax Writer Taxwriter Ltd
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Planning was pointless in 2020, as almost every week there was yet another tax-related announcement from the Treasury. I counted four mini-Budgets, but there could have been more; the first one was a fever-induced blur for me.

This is what is currently on my planning board for 2021:

VAT and customs duty supremos Jason Croke and Neil Warren have done their level best to warn businesses about the new arrangements that apply from 1 January 2021 in our Brace for Brexit series. There will be further practical details to emerge no doubt, so keep an eye out for further articles from Jason on Brexit realities. 

One imminent deadline is the filing date for the last VAT MOSS return for 2020, due by 20 January 2021. All sales of electronic or broadcasting services by UK suppliers from 1 January 2021 will have to be reported under the non-union VAT MOSS scheme, which requires a different VAT registration in an EU country (ie not the UK).

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Replies (15)

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By Michael C Feltham
04th Jan 2021 11:40

"A more fundamental tax hike will be needed to raise enough to “balance the books” ".

I haven't a wee clue where he plans to raise the tax revenue needed!

The country is skint; national borrowings are rising by the minute and any punitive increases will prevent a nascent recovery, throw hundreds of thousands - more - out of work - thus increasing social spending costs, etc.

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Replying to Michael C Feltham:
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By AndrewV12
04th Jan 2021 13:42

I think it will take years to balance the books, but there may be a solution (part solution anyway), if the Chancellor is brave enough he may wish to introduce a windfall tax on the usual suspects, Amazon, netflix, Facebook, Mc Donald's, Starbucks, Costa coffee, Vodafone, EE ..............

Tax them whilst you can café Nero, one of the usual suspects went into a CVA in 2020.

It wont be easy but it will be un-controversial. I lot more palatable than raising VAT or NI...........
It may be a long term project.
who knows.

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Replying to AndrewV12:
By Kentwillumsen
04th Jan 2021 14:12

I doubt a "windfall" tax on foreign (mainly US) business would be allowed without reprisals.
However the chancellor could introduce a sales tax with no or limited deductions, that would equalise tax on foreign and domestic business, as well as equalise on-line and high-street business if replacing business rates as well.
Sales tax is now possible, as VAT used to be an EU requirement.

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Replying to Kentwillumsen:
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By AndrewV12
04th Jan 2021 14:28

Hi, that's sort of what I was getting at.

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By AndrewV12
04th Jan 2021 13:25

And we were led to believe the Conservative Party is the party of business and cutting red tape, me thinks not.

Mind you Boris did say during campaigning for the brexit vote '**** business'.

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Replying to AndrewV12:
By Kentwillumsen
04th Jan 2021 14:58

Agree, the introduction of IR35 proves the Conservatives are anti small business and pro red tape that favours large business

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Replying to Kentwillumsen:
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By Michael C Feltham
04th Jan 2021 17:46

@Kent:

Excepting, of course, it was introduced by Labour, thanks to the odious Dawn Primarolo...

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Replying to Michael C Feltham:
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By Grizzler
16th Jan 2021 12:32

Except of course ,it was rightly meant to tackle the abuse by IT consultancy business who were effectively employees. Its reach wasn't supposed to affect smaller business and make administration so onerous it forces them into salaried employment with large business. This is something the current conservative administration has brought in. As the previous poster said it's Anti small business.

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By abaccserv
04th Jan 2021 13:38

A simple question I hope. I have an online seller supplying goods to the EU ( both business and individuals ) The goods to individuals rarely exceed £50 in value, does he continue to charge VAT to the individuals ?

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Replying to abaccserv:
Jason Croke
By Jason Croke
04th Jan 2021 14:50

abaccserv wrote:

A simple question I hope. I have an online seller supplying goods to the EU ( both business and individuals ) The goods to individuals rarely exceed £50 in value, does he continue to charge VAT to the individuals ?


B2C sales from UK to EU are now zero rated exports, so zero rated invoice to customer....however, when the goods arrive in the EU destination, the customer may find the parcel is held by their local customs/post office - they may get lucky and the product is delivered or if they are unlucky, they'll get a card from their post office asking them to pay import VAT on the goods before they can be delivered. A disclaimer on the website might be useful, along the lines of "customer is liable for import VAT" so that the customer knows the price they pay on the website might not be the final price.

From July 2021, the element of luck is removed, the UK online seller will be required to register for One Stop Shop (OSS), the UK supplier then charges VAT to the Eu consumer at whatever the prevailing VAT rate is in the consumers Country, so sell to a French consumer charge French VAT, sell to an Italian consumer, charge Italian VAT.

UK Supplier then files a single "OSS" VAT return, remits all the VAT charged and paid by the customer, the one return saves registering in every EU member state. UK supplier has to decide where they want to register for OSS, it can't be the UK, so perhaps Ireland or Malta (forms will be in English). If UK supplier registers for OSS in say Ireland, they file the OSS return and Ireland is responsible for distributing the various bits of VAT to France, Italy, etc.

So for now, zero rated and customer might/might not get stuck with import VAT, after July charge the local VAT rates where the customer is. This only applies to goods under £135. Note that the £135 is the package value, so if customer orders 3 things each costing £50 and shipped as one package then the 3 items will exceed the £135 threshold.

Thanks (2)
Replying to Jason Croke:
By Kentwillumsen
04th Jan 2021 15:20

Registering for OSS may be optional, what is your view on this?
https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross...
Saying at the end of the page re import scheme:
"Where the import OSS is not used, a second simplification mechanism will be available for imports. Import VAT will be collected from customers by the customs declarant (e.g. postal operator, courier firm, customs agents) which will pay it to the customs authorities via a monthly payment."

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Replying to Jason Croke:
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By abaccserv
04th Jan 2021 16:47

Jason Croke wrote:

abaccserv wrote:

A simple question I hope. I have an online seller supplying goods to the EU ( both business and individuals ) The goods to individuals rarely exceed £50 in value, does he continue to charge VAT to the individuals ?

B2C sales from UK to EU are now zero rated exports, so zero rated invoice to customer....however, when the goods arrive in the EU destination, the customer may find the parcel is held by their local customs/post office - they may get lucky and the product is delivered or if they are unlucky, they'll get a card from their post office asking them to pay import VAT on the goods before they can be delivered. A disclaimer on the website might be useful, along the lines of "customer is liable for import VAT" so that the customer knows the price they pay on the website might not be the final price.

From July 2021, the element of luck is removed, the UK online seller will be required to register for One Stop Shop (OSS), the UK supplier then charges VAT to the Eu consumer at whatever the prevailing VAT rate is in the consumers Country, so sell to a French consumer charge French VAT, sell to an Italian consumer, charge Italian VAT.

UK Supplier then files a single "OSS" VAT return, remits all the VAT charged and paid by the customer, the one return saves registering in every EU member state. UK supplier has to decide where they want to register for OSS, it can't be the UK, so perhaps Ireland or Malta (forms will be in English). If UK supplier registers for OSS in say Ireland, they file the OSS return and Ireland is responsible for distributing the various bits of VAT to France, Italy, etc.

So for now, zero rated and customer might/might not get stuck with import VAT, after July charge the local VAT rates where the customer is. This only applies to goods under £135. Note that the £135 is the package value, so if customer orders 3 things each costing £50 and shipped as one package then the 3 items will exceed the £135 threshold.

Thank you for the detailed reply, that is broadly the answer I had given with the exception of the OSS. I'll be honest I wasn't even aware of that, sounds like jolly good fun.

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Replying to Jason Croke:
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By Grizzler
16th Jan 2021 12:40

Can I ask what happens if the goods are above £135. What does the business need to do in respect of charging or not charging VAT both now and after July?

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By moneymanager
04th Jan 2021 17:06

"What to expect in tax"

There will be a lot of deckchair shuffling but the principle trajectory of the "Covid scare" is:

a) more, a lot more of both direct and indirect tax and especially related to assets e.g. unavoidable property charges like Council Tax then, after a period of some three to four years

b) nil, after ALL liquid and near liquid assets have been exhausted, the lessliquid will, that should really read "will be" crashed, quite deliberately

this renders all, everywhere, vassals of a tyrannical world government, you can take your pick from Orwell or Huxley, but Huxley's notion of people " willingly giving up their freedoms in order to be free" seems to be on the "vaccinate and you can fly" money.

Happy New Year? It can be but we have to want it enough.

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By TalkSense
05th Jan 2021 21:55

Thank you Rebecca for this very helpful, well thought out article.

More like this please Accountingweb

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