Last updated: 13 December 2021
Wright Hassall VAT Newsletter – December 2021
Welcome to the first VAT newsletter from Wright Hassall.
Below are articles on some of the significant VAT changes in 2021. We also have two guest articles: tax risks in insolvency; and a victory against tax follower notices and accelerated payment notices. If you have any queries, we’d be delighted to discuss.
2021 has been quite a year for VAT:
Brexit had already begun one hour before the new year. The rapidly-introduced changes affected businesses importing/exporting goods, while the impact on services was often overlooked. Queries we received were varied: should postponed VAT accounting be used, how are services affected, do margin scheme businesses now cease trading, what happens to trade involving Northern Ireland, how can online marketplaces support their sellers through the changes, and many more. Communication was always part of the solution: with suppliers, customers, transporters, EU registration agents and (of course) with the VAT specialist.
On 1 March 2021, as Brexit questions reached their height, the domestic reverse charge (DRC) came into effect in the construction industry. Suppliers and customers issued notices to each other declaring which supplies were invoiced with VAT normally and which had VAT removed under the new reverse charge. The boundaries between the two were often blurred and changeable, resulting in disagreements. Communication again was key, enabling agreement to be reached.
1 July 2021 saw more new VAT rules. The new rules affected goods moving from one EU member state to another, goods imported into the EU, e-commerce and online marketplaces, and services. The risk in doing nothing was that suppliers would be required to register for VAT in all 27 EU member states. One Stop Shops were created (three different versions) to reduce the additional VAT registrations from 27 to only one or two. Even then, remodelling the supply chain is often a better alternative. Communication again was key: what will suppliers tell their customers and transporters, do they have a registration agent in the EU and a VAT specialist to guide them?
Amidst all this, other VAT changes were overshadowed. When compensation is received, this is not outside the scope of VAT according to HMRC (although discussions continue with them); when large companies enter uncertain VAT arrangements, notification to HMRC will be required; and sale and leaseback arrangements aren’t transactions for VAT purposes. The economic impact of Brexit and the pandemic has weakened many businesses: VAT and direct law questions have arisen in insolvency, employment, corporate restructuring, converting commercial property to residential, and so on.
In more light-heated news, we celebrate Wright Hassall’s stability. Founded in 1846, it’s our 175th anniversary this year. You might know Kevin Hall as a VAT specialist, but he started life as a classicist and he writes about the Roman world 175 decades ago in 271: financial crime, war on terror, the end of a plague – little changes!
Kevin has spoken and written widely this year and below are some of his articles and recordings, with credit where published by other outlets. More can be found on Wright Hassall’s website.
We’re always happy to receive queries. For more information or to talk through a tentative uncertainty, please get in touch, we’d be happy to discuss.
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