Month: February 2022

With HMRC taking a constructive approach to enforcement the outlook is positive.

All VAT-registered small businesses with a taxable turnover of up to £85,000 will have to comply with the latest MTD legislation from April 2022. HMRC has urged these businesses to sign up for MTD for VAT before it becomes mandatory.

HMRC has also announced significant changes to the system for late VAT payments, which were initially due to come into force from April of this year. The new points-based system for late payments was intended to be tougher on repeat offenders but fairer on those who occasionally missed deadlines. This new system has now been delayed until January 2023.

It remains important for this last round of eligible VAT-registered businesses to prepare for MTD legislation and ensure the right processes and protocols are in place.

Some businesses are taking a forward-thinking approach and using the Government’s digitisation drive as an opportunity for further investment in cloud-based technology. However, there are concerns that smaller businesses may struggle to see the initial benefits, at least in the short term.

Key dates:

April 1 2022: MTD for all VAT-registered businesses becomes mandatory.
January 2023: new implementation date for new points-based late VAT payment penalty system.
April 2024: introduction of second stage of MTD for Income Tax Self-Assessment (ITSA).

Skillman Accountancy Limited uses QuickBooks’ HMRC-recognised MTD software, which is designed for small businesses and is a Quickbooks MTD ProAdvisor.

https://www.aatcomment.org.uk/audience/members/transition-to-making-tax-digital-is-proceeding-smoothly-so-far/

The Plastics Packaging Tax is set to come into force from 1 April 2022. It applies to manufacturers and importers of plastic packaging, but could also affect retailers, freight transport providers and fresh food producers.

Under the new legislation, plastic packaging which contains less than 30% recyclable material will be subject to taxation of £200 per tonne.

All businesses that have manufactured or imported more than ten tonnes of plastic packaging over the last twelve months will be required to register for the Plastic Packaging Tax.

HMRC will apply fixed or daily penalties for failure to comply with the new legislation. Guidance published in February included registration advice and tests to carry out to determine when and how to register for the plastic packaging tax.

Under the guidance:

• Businesses are required to register for the tax and pay it, within 30 days of becoming liable.
• The two tests businesses should carry out to determine tax liability include:

1. Look back over the previous twelve months to ascertain if the ten-tonne threshold has been reached.
2. Look forward to the next thirty days to ascertain the likelihood of manufacturing or importing more than ten tons of plastic packaging within that timeframe.

Plastic packaging that comes into direct contact with medicines (such as blister packs for tablets) or containers designed to be used with the goods throughout their lifetime (such as power tool boxes), are exempt from the tax.

Further information:

https://www.aatcomment.org.uk/audience/members/are-you-ready-for-the-plastic-packaging-tax/

Skillman Accountancy Limited