Welcome to the October 2019 Newsletter from Beatons Group
Following an industry backlash, HMRC has delayed the introduction of the VAT reverse charge. The charge was set to take effect from 1 October 2019, but this has now been pushed back by 12 months due to fears that firms in the construction industry 'are not ready'.
Meanwhile, the Federation of Small Businesses (FSB) has called for the government to tackle the so-called 'business crime crisis'. According to the FSB, the cost of combating business crime has run into 'billions of pounds'.
HMRC delays introduction of VAT reverse charge
HMRC has announced a one-year delay to the introduction of the VAT domestic reverse charge for building and construction services.
The reverse charge represents part of a government clampdown on VAT fraud. According to the government, large amounts of VAT are lost through 'missing trader' fraud. The charge was set to come into effect on 1 October 2019. It has now been pushed back 12 months due to fears that businesses in the construction sector are not ready.
As part of missing trader fraud, VAT is charged by a supplier, who then disappears, along with the output tax. The VAT is thus lost to HMRC. The construction industry is considered a particularly high-risk sector because of the potential to make supplies with minimal input tax but considerable output tax.
The reverse charge does not change the VAT liability: it changes the way that VAT is accounted for. In the future, the recipient of the services, rather than the supplier, will account for VAT on specified building and construction services. This is called a reverse charge. The reverse charge is a business-to-business charge, applying to VAT-registered businesses where payments are required to be reported through the Construction Industry Scheme (CIS).
HMRC says it remains 'committed to the introduction of the reverse charge', and has put a robust compliance strategy into place in order to tackle fraud in the construction sector.
Businesses will be required to adapt their accounting systems in order to accommodate the reverse charge. HMRC predicts that 150,000 firms in the construction industry will be affected by the change.
FSB calls on government to tackle 'business crime' as costs run into billions
The Federation of Small Businesses (FSB) has called on the government to make tackling business crime a priority as the costs incurred as a result of such crime run into 'billions of pounds'.
Research carried out by the FSB revealed that almost half of small businesses in England and Wales have been affected by business crime. According to the research, around 7.7 million crimes are committed against small firms every year.
Traditional crime, including robbery, fraud and criminal damage cost small businesses nearly £17 billion each year.
Meanwhile, one in five small businesses suffered a cyber-attack between January 2017 and January 2019, the FSB found. In total, over seven million attacks took place over the two-year period, at an average of almost 10,000 a day.
The average cost of an attack on a small business is £1,300, with the combined cost totalling £4.5 billion. The FSB has called for the Home Office to link funding to the 'proper resourcing of business crime'.
'At a time of huge uncertainty and increasing costs, business crime is a serious issue that is devastating firms up and down the country,' said Mike Cherry, National Chairman of the FSB.
'These figures come before other indirect costs such as store closures and staff absences are even taken into account, meaning that the £17 billion figure is estimated to be far higher. Traditional crime, including robbery, fraud and criminal damage, affects around 900,000 small businesses each year, and we must tackle this issue before it gets even worse.'
For more information on combating business crime, please visit the Hot Topics section of our website.
ESSENTIAL TAX DATES FOR OCTOBER
Due date for payment of Corporation Tax for period ended 31 December 2018.
Deadline for notifying HMRC of new sources of taxable income or gains or liability to the High Income Child Benefit Charge for 2018/19 if no tax return has been issued.
Due date for income tax for the CT61 quarter to 30 September 2019.
Tax and NICs due under a 2018/19 PAYE Settlement Agreement.
PAYE, Student loan and CIS deductions are due for the month to 5 October 2019.
PAYE quarterly payments are due for small employers for the pay periods 6 July 2019 to 5 October 2019.
Deadline for submitting 'paper' 2018/19 self assessment returns.
QUOTE OF THE MONTH
'At a time when countries are facing many significant challenges, such as weakening economic growth, ageing populations, income and wealth inequality, and the changing nature of work and climate change, the appetite for growth-enhancing, structural tax reforms seems to be waning.'
Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development (OECD), commenting on research which suggests that the pace of tax reform is 'slowing'.
WEBSITE OF THE MONTH
Analyses the latest technological innovations and developments.
ON OUR WEBSITE
A wealth of resources for businesses
With topics ranging from capital allowances to salary sacrifice, the
Your Business section of our site is a hub of essential information.
Useful information for individuals
For a comprehensive bank of guides covering the dividend nil-rate, inheritance tax planning and much more, please visit the Your Money area of our website.