From 1 April 2012, all VAT-registered businesses must send their VAT returns online and pay their VAT electronically. Currently, only newly-registered businesses, and those with turnovers of more than £100,000, have to file and pay their VAT online. The new rules will cover VAT returns filed for accounting periods beginning on or after 1 April 2012.
To file your VAT return online, you'll need to register for HMRC Online services. Further help and advice is available from the HMRC website or contact us.
VAT returns on-line for all VAT-registered businesses
Revised advisory fuel rates 1 December 2011
H.M. Revenue and Customs (HMRC) have published the latest advisory fuel rates relating to mileage payments for business travel in company cars. These are as follows:
| Engine size | Petrol | LPG |
| 1400cc or less | 15p | 10p |
| 1401cc to 2000cc | 18p | 12p |
| Over 2000cc | 26p | 18p |
| Engine size | Diesel |
| 1600cc or less | 12p |
| 1401cc to 2000cc | 15p |
| Over 2000cc | 18p |
The only change this quarter is the reduction of 1p per mile in LPG for engines sizes of 1400cc or less.
The new rates will be effective from 1 December 2011, however for the first month employers may continue to use the previously published rates if they choose to.
These rates will be reviewed again in February 2012 and any changes made will be effective from 1 March 2012. The revised fuel rates will be published on the fuel rates page on the HMRC website when they are released.
Advisory fuel rates can be used to calculate the following:
- Reimbursement to employees of fuel used for business travel in a company car
- Repayment by employees of fuel used for personal travel in a company car
- Allowable input VAT on business mileage claims
A more detailed explanation of the use of these rates is on the HMRC website.
The rates applying for earlier periods are also on the HMRC website.
If you have any questions regarding the use of advisory fuel rates or mileage payments please contact us.
HMRC launches new VAT email Q&A service
HMRC has launched a new email service to handle VAT enquiries.
The VAT enquiries page on the HMRC website includes details of how to contact HMRC in particular circumstances.
In general, HMRC’s preferred option is for you to find the answer to your question on the HMRC website. If this fails, contact details are shown for the VAT telephone helpline (0845 010 9000), email and post.
Where possible, HMRC strongly recommends that you submit written questions about VAT by email, as it expects to reply to questions more quickly this way. It suggests that only particularly long questions, or those where you need to attach something, should be sent by post.
The email service is split into two parts:
Questions about VAT online services
Following the links will lead you to email templates designed to assist with the format of your enquiry. These include:
UK VAT-registered business - email a VAT question
Business not registered for VAT in the UK - email a VAT question
Members of the public - email a VAT question
Agent with a UK VAT-registered client - email a question
Agent with a client who is not registered for VAT in the UK - email a question
If you need to write to HMRC by post, you should use the following address:
HM Revenue & Customs
Written Enquiries Section
Alexander House
Victoria Avenue
Southend
Essex
SS99 1BD
VAT Flat Rate Scheme – No Need to Include Bank Interest
After a recent case, VAT Notice 733 has been updated to state that bank interest is no longer required to be included in the VAT turnover when calculating VAT under the VAT Flat Rate Scheme.
If you have included bank interest in your VAT Flat Rate turnover you can make a claim for a refund of the VAT paid within the last four years. Please contact us for any advice.
Revised Advisory Fuel Rates – 1 September 2011
H.M. Revenue and Customs (HMRC) have published the latest advisory fuel rates relating to mileage payments for business travel in company cars. These are as follows:
| Engine size | Petrol | LPG |
| 1400cc or less | 15p | 11p |
| 1401cc to 2000cc | 18p | 12p |
| Over 2000cc | 26p | 18p |
| Engine size | Diesel |
| 1600cc or less | 12p |
| 1601cc to 2000cc | 15p |
| Over 2000cc | 18p |
The only change this quarter is the reduction of 1p per mile in LPG for engine sizes of 1401cc to 2000cc.
The new rates will be effective from 1 September 2011, however for the first month employers may continue to use the previously published rates if they choose to.
The next quarterly review will be effective from 1 December 2011. The revised fuel rates will be published on the fuel rates page on the HMRC website when they are released.
Advisory fuel rates can be used to calculate the following:
- Reimbursement to employees of fuel used for business travel in a company car
- Repayment by employees of fuel used for personal travel in a company car
- Allowable input VAT on business mileage claims
A more detailed explanation of the use of these rates is on the HMRC website.
The rates applying for earlier periods are also on the HMRC website.
If you have any questions regarding the use of advisory fuel rates or mileage payments please contact us.
VAT initiative campaign
HMRC have recently announced the VAT initiative campaign which is an opportunity for businesses to tell HMRC that they should be registered for VAT. This should happen between now and 30 September. The VAT initiative campaign is aimed at businesses that:
- have already passed, or are expecting to pass within the next 30 days, the current VAT threshold of £73,000
- have passed the VAT threshold in a previous 12 month period but did not register for VAT
- would like HMRC help to register now
- want to take advantage of a reduced penalty
Should I be registered?
You must register for VAT if any of the following applies:
- your VAT taxable turnover for the previous 12 months is more than £73,000 (the current VAT registration threshold)
- you think your VAT taxable turnover will exceed the threshold in the next 30 days
- you exceeded a VAT threshold at an earlier point in time and have not registered for VAT
- you take over a VAT-registered business as a going concern
It is an offence to not register for VAT when you have exceeded the threshold and there may be penalty charges in addition to the VAT due. By telling HMRC voluntarily under the VAT Initiative before 30 September, you will incur a lower penalty than if HMRC have to enforce your registration and in some cases, there will be no penalty charge at all. You may also be able to spread the length of time over which you have to pay HMRC rather than paying in one lump sum.
Who cannot take part in the VAT Initiative?
You will not be eligible to take part in the campaign if:
- Your tax affairs are already under investigation (whether civil or criminal). You should tell the HMRC officer dealing with your check that you want to make a disclosure. A full and early disclosure may reduce the amount of any penalty HMRC charge
- If you have already made a disclosure under any of the earlier HMRC campaigns you won’t be eligible to disclose under this campaign.
You can find out if you could have disclosed under a one of the previous HMRC campaigns - for example plumbers tax safe plan - but failed to do so, on the HMRC website.
What do I need to do?
30 September is the last day which you can notify HMRC that you wish to take part in the initiative. You will need to complete the VAT initiative notification form and send it to HMRC.
If your notification is accepted HMRC will send you an acknowledgement and a Notification Reference Number (NRN). Please state on the notification form if you want HMRC to send you a VAT registration form (VAT1). Alternatively, you can download a form VAT1 but you should not send it to HMRC until you have received your NRN.
You will need to complete the VAT1 and return it to HMRC by 31 December, making sure you enter your NRN in the top right hand corner of the form. You cannot register online if you wish to take part in the VAT Initiative.
What if I decide not to notify - even though I should be registered for VAT?
In preparation for the launch of the VAT Initiative HMRC has been looking at information they already hold about taxpayers and their income. When the deadline for notifying has passed, HMRC will compare this information which they already hold with the details that customers have shown on their tax returns.
Where HMRC thinks that someone should have registered for VAT, they will compare information from various sources and will target the customers who they think should be registered, but who have not told HMRC they want to take part in this initiative. HMRC will carry out checks into their tax affairs or use their legal powers to get detailed information about their financial affairs and other undeclared income.
Those businesses that are found to owe additional tax will be charged higher penalties than those offered under the campaign and HMRC can charge penalties of up to 100 per cent of the additional tax.
If you are unsure of whether you should have registered for VAT, and would like assistance then please contact us at Edwin Smith.
HMRC extends ‘tax cheats’ campaign
HMRC have announced a selection of new campaigns designed to target rule breakers and home in on tax evaders.
Over the next year HMRC will use cutting-edge tools such as “web robot” software to search the internet and pinpoint more accurately people who have failed to pay the right tax. The “web robot”, can also be used with the department’s Connect computer system, which collects third party data to uncover hidden relationships and anomalies in order to highlight people who are trading without telling HMRC.
HMRC have announced that they intend to operate a selection of campaigns in 2011/12 targeting the following areas:
- Those trading over the £73,000 turnover limit without registering for VAT
- Those who provide private tuition or coaching without declaring the income to HMRC
- Business trading in E-market places (eBay etc) with out registering as a business with HMRC
- An extension of the plumbers’ campaign will invite other tradespeople to declare underpaid tax
Previously, HMRC have operated campaigns targeting offshore investments, medical professionals and people working in the plumbing industry and have raised more than £500m from voluntary disclosures and a further £100m from follow-up activities.
Before designing and launching the campaigns, HMRC will seek input from interested parties.
If you think that you have not paid the correct amount of tax or would like advice regarding VAT registration please contact us.
VAT fuel scale charges from 1 May 2011
VAT fuel scale charges, for taxing private use of road fuel, were amended for periods commencing on or after 1 May 2011.
The scale charge for a particular vehicle is determined by its CO2 emissions figure. Where the CO2 emissions figure of a vehicle is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used. For cars which are too old to have a CO2 emissions figure HM Revenue & Customs (HMRC) have prescribed a level of emissions by reference to the vehicle's engine capacity (cc).
The HMRC website has details of the CO2 emissions amounts and the related fuel scale charges. The tables on the HMRC website show VAT inclusive scale charges applicable in each accounting period, depending on whether it is a 12 month, three month or one month accounting period.
Revised Advisory Fuel Rates – 1 June 2011
H.M. Revenue and Customs (HMRC) have published the latest advisory fuel rates relating to mileage payments for business travel in company cars. These are as follows:
| Engine size | Petrol | LPG |
| 1400cc or less | 15p | 11p |
| 1401cc to 2000cc | 18p | 13p |
| Over 2000cc | 26p | 18p |
| Engine size | Diesel |
| 1600cc or less | 12p |
| 1601cc to 2000cc | 15p |
| Over 2000cc | 18p |
The diesel rates have changed slightly as there are now three categories, previous diesel below 2000cc were the same rate thus having only two rates. As a result, diesel for 1600cc or less has actually reduced by 1p.
The new rates will be effective from 1 June 2011, however for the first month employers may continue to use the previously published rates if they choose to.
These rates will now be reviewed quarterly, with any changes made from the next review being effective from 1 September 2011. The revised fuel rates will be published on the fuel rates page on the HMRC website when they are released.
Advisory fuel rates can be used to calculate the following:
- Reimbursement to employees of fuel used for business travel in a company car
- Repayment by employees of fuel used for personal travel in a company car
- Allowable input VAT on business mileage claims
A more detailed explanation of the use of these rates is on the HMRC website.
The rates applying for earlier periods are also on the HMRC website.
If you have any questions regarding the use of advisory fuel rates or mileage payments please contact us.
Business Record Checks
HMRC has started pilot business record checks in 8 locations (Edinburgh, Irvine, Manchester, Liverpool, Stockport, Sunderland, Sheffield and Portsmouth) running until 15 July.
It is expect that up to 1,200 Business Record Check (BRC) visits will be undertaken by the 30 HMRC staff assigned to the pilot.
HMRC has clarified that the BRC initiative does not insist on a specified format for business records, but checks whether the records of all business income and outgoings are recorded in a way appropriate for the size and nature of the trade.
HMRC has also stated that it does not intend to charge any penalties for record keeping failures during the current phase of testing and continues to review its long-term planning around the introduction of such a charge in the future.
At some point during 2011 it is expected that the BRC visits will become standard practice and penalties are likely for poorly kept records. More information is expected after the initial pilot.
HMRC have issued free tools to help you get your business records in order. The four new products are suitable for the self employed, sole traders and small businesses. Also you can contact us as we can help you review your records.
Keeping records for business – what you need to know: a basic guide with a helpful list of where to get more information.
A general guide to keeping records for your tax return: detailed guidance on record-keeping covering what type of records you may have to keep, common problems and examples for different types of business.
Set up a basic record-keeping system: with examples of spreadsheets and information about setting up a record-keeping system.
Find out what records you should be keeping: looks at the records you need to keep and assesses how well you are keeping them. If you are thinking of starting business the tool provides you with a checklist. If you are established it will give feedback and advice on improvements you may need to make.
