Businesses have been warned they face yet more sweeping changes to VAT and Customs Duty rules as the New Year unfolds.
Francesca Hutcheson, Tax Director here at Dyke Yaxley Chartered Accountants, says 2022 looked set to bring more tax and administrative changes due to the ongoing pandemic and the UK’s exit from the European Union.
“It’s a New Year with new rules, and many of the changes will impact businesses of all sizes so it’s important to be prepared for what lies ahead.”
Francesca says businesses that had taken advantage of the interest-free instalment plan for deferred VAT needed to make sure they settled any remaining payments in line with their agreed plan.
“This scheme no longer exists and any unpaid amounts are potentially subject to interest and/or additional penalties, so it’s vital that you take action now.”
From the start of 2022, full customs declarations and controls are now required for EU imports – excluding Ireland.
“Most businesses will now have to make import declarations and pay relevant tariffs at the point of import, rather than delay the paperwork by up to six months as was permitted during 2021,” says Francesca.
“These declarations are complex and time consuming, and any errors in the submissions could lead to costly delays or financial penalties.”
Francesca says from the start of April, all UK businesses that used more than ten tonnes of plastic packaging a year may need to register for – and pay – the new Plastic Packaging Tax at £200 per tonne.
|“This new tax is aimed primarily at producers and importers of packaging waste with a low content of recycled material, and it could have far-reaching administrative and financial implications for businesses across the supply chain.”|
Francesca also warns that the 12.5 per cent reduced VAT rate for the hospitality sector was set to return to the main rate of 20 per cent from April 1, 2022.
“The cut was designed to boost customer demand as a result of the pandemic, although this sector is still struggling as a result of staff shortages and reduced demand.
“Also from April, a new penalty regime will be introduced and VAT late filing and late payment interest charges will be made consistent with other taxes.
“Making Tax Digital – which involves quarterly reporting – will also apply to VAT-registered businesses currently trading below the £85,000 registration threshold from April 1 too.
“However, in a last minute change of heart, HMRC announced last week that the introduction of a new penalty regime to make VAT late filing and late payment interest charges consistent with other taxes was deferred from April 2022 to January 2023, to allow HMRC more time to make the necessary system changes.
“The turn of the New Year is always a busy and stressful time as businesses look to pick up where they left off before Christmas – but with careful preparation, your business can be ready to face whatever challenges 2022 brings.”