New VAT Regulations
Steve Collings outlines new regulations issued by HM Revenue and Customs in connection with filing VAT returns.
The Government has now moved forward with their plans to make filing VAT returns electronically mandatory from April next year. This requirement will affect all businesses with an annual turnover of more than £100,000. This results in the vast majority of UK clients being affected by this change.
In addition, VAT must be paid electronically and the accepted methods are BACS, Billpay and Direct Debit. Accountants in practice who act for clients and are authorised to act as Agent for online services can advise their clients that there are no particular steps that they have to take as long as the practitioner is authorised to act as Agent in respect of VAT.
Clients who file their own VAT returns are advised to register for online filing for their VAT returns prior to April 2010. Clients who file their own returns need to be informed that in order for them to be able to register for VAT online, they will need their last VAT return they have submitted to HM Revenue and Customs, together with the date the business registered for VAT – this information can be obtained from the company’s VAT Registration Certificate.
Some clients may not be happy about this process and may find it somewhat daunting. Where clients wish practitioners to file their returns for them, they should be instructed to give the practitioner sufficient time in order that the practitioner can register as the client’s appointed agent for VAT Online.
As stated earlier in the article, clients who will be affected by this change will need to make arrangements to pay VAT liabilities electronically by the accepted means. A Direct Debit will result in HMRC collecting VAT liabilities three working days after the due date of the return. However, online filing does attract a seven-day extension to the deadline, so a return due by 31 July will fall due by the 7 August if filing online. This would mean that any VAT liabilities are collected by HMRC between the 10th and 12th of the following month after the normal due date of the return.
For those clients who use the annual accounting scheme, the Value Added Tax (Amendment) (No. 4) Regulations 2009 (SI 2009/2978) come into force on 1 December 2009. These regulations require VAT registered businesses to submit returns electronically for accounting period which start on or after 1 April 2010. Again, these regulations apply to businesses currently registered for VAT who have an annual VAT exclusive turnover of £100,000 or above and those businesses, regardless of turnover, who become VAT registered on or after 1 April 2010.
Where a company is run by individuals who have a religious conscience objection to using computers, then they will be exempt from the requirements above. In addition, if a company’s turnover is less than £100,000 then they do not have to file VAT returns online and can still continue to submit paper returns. HM Revenue and Customs have intimated that this may change in 2012.
Steve Collings FMAAT ACCA DipIFRS is audit and technical manager at Leavitt Walmsley Associates and a freelance technical author. He is the author of ‘The Core Aspects of IFRS and IAS’ and lectures on financial reporting and auditing issues.
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