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Update week ended 8 October 2010

8th October 2010

EU VAT reclaims

If you are VAT registered in the UK, but not in another EU country (e.g. France) the import of goods is generally simple. They are zero rated on import but you charge output VAT on the sales side of the VAT return form and equal and opposite input VAT on the purchase side (generally speaking, if there are no exempt supplies).

However, if purchasing goods while in, say, France – you will suffer VAT on the goods. If you use these goods in your business you can claim back the VAT online. The UK side has been operating smoothly since 1 January 2010 but the EU side less so. As a result the deadline for making these online reclaims has been extended (for 2009 purchases) to 31 March 2011.

HMRC have agreed this extension, so if you are in the above situation and have not reclaimed (above €50/country per claim), the money will be transferred – after any forex and bank charges.

The VAT scheme when buying goods whilst abroad

VAT reclaim extension to 31 March 2011


Cheque payments for quarterly VAT

Before 1 April 2010, HMRC treated cheque payments as received on the very day they received the cheque itself. Since then, (for cashflow reasons etc.) this has changed to the clearance date i.e. 3-4 working days later (from 2012 it is compulsory to pay online)

However, in the meantime you may fall into the penalty (surcharge regime) if you are within a day or two out – whereas for the last 35 years you have been doing exactly the same thing. The surcharge regime will last at least 12 months.

If you send in a cheque and paper VAT return (not recommended) you need to make sure it arrives 4-5 working days before the deadline.

HMRC guidance is less than precise:

“If you pay your paper return by posting a cheque, it must reach HMRC no later than the due date shown on the return, which is normally one month after the end of the VAT period.”

After September 2010, HMRC have taken a slightly harder line on the discrepance between clearing date and receipt date. If you have received notice of surcharge it may be worthwhile appealing:

Deadlines for payments and VAT returns

HMRC online “upgrades”

If you need to do any Corporation Tax, Self assessment or PAYE filing – now would be a good time to do it ad you won’t have the chance between 2.30pm and Monday morning.

One of the problems being fixed is the Annual Investment Allowance uplift from £50,000 to £100,000 (effective for periods on/after 1 April 2010). Until now, the program didn’t allow it.

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“This information is taken from Mark Lee’s weekly practical tax newsletter, published by the Tax Advice Network”