Practical guidance on changes to VAT, employment tax and more

5 January: ICAEW’s Tax Faculty has produced six new TAXguides to support members with the key issues facing them in 2021, including: the end of VAT MOSS, new VAT ecommerce rules, employment tax changes and corporation tax deductions for intangible fixed assets.

As 2020 drew to a close, ICAEW’s Tax Faculty published a swathe of practical guidance tackling key issues in employment tax, VAT and corporation tax.

VAT

As the Brexit transition period ended and the UK government struck a trade deal with the EU, the Tax Faculty updated its guidance on UK VAT after the transitional period.

It also published specific guidance on what the end of the transition period means for UK businesses that sell broadcasting, telecommunication and electronic services to consumers inside the EU, particularly the closure of the UK VAT Mini One Stop Stop (MOSS) scheme.

In TAXguide 18/20, independent VAT consultant Neil Warren answers the key questions being asked about the end of the UK VAT MOSS scheme, including:

• What supplies are classed as electronic services?
• What is MOSS and how will this change on 1 January 2021?
• What is the non-union VAT MOSS scheme?
• What about VAT paid on expenses incurred in EU countries?

In TAXguide 20/20, Warren goes on to provide specific guidance on the major VAT changes related to ecommerce that are being introduced by the EU on 1 July 2021.

The UK is now classed as a “third country”, meaning that goods arriving in an EU country from Great Britain are always classed as imports rather than arrivals and a lot of the July 2021 changes relate to imports (such as the import one stop shop (IOSS) scheme).

However, the changes also affect non-EU suppliers of business-to-consumer (B2C) services, in situations where VAT is payable in a member state. In this TAXguide, Warren explains the non-union one stop shop (OSS) and the import one stop shop (IOSS) schemes.

Employment

In TAXguide 21/20, employment tax specialist Kate Upcraft provides practical guidance on a broad range of employment tax changes for 2020/21 and looks ahead to 2021/22.

The guide provides support on off-payroll working, national insurance exemptions, the employment allowance, termination payments, student loans, RTI matters, statutory parental bereavement pay, and summarises benefits and expenses in the context of COVID-19.

Meanwhile, respected tax expert Rebecca Benneyworth focuses specifically on accounting for off-payroll working in TAXguide 22/20.

Benneyworth provides and overview of changes to the regime that will be implemented in 2021 before considering the accounting entries required by way of two worked examples. The first illustrates the likely practical and financial impact of measures on the individual worker and the personal service company where 100% of the business of the company is covered by the off-payroll working rules.

The second illustrates the issues when the intermediary has a mixture of income, some regarded as within the off-payroll working rules and some not.

The first TAXguide of 2021 (TAXguide 01/21), contains answers to the questions raised at ICAEW Tax Faculty’s latest off-payroll working webinar delivered by Steve Wade, Associate Partner in EY’s People Advisory Services, and Kate Upcraft on 23 November 2020. The questions cover:

• how to ascertain the size of clients,
• overseas clients,
• ascertaining employment status and issuing status determination statements,
• deemed employment income,
• personal service companies including onward payment of fee income to the contractor, and
• ICAEW practitioner support.

The answers include links to the latest HMRC guidance.

Corporation tax

In TAXguide 19/20, Andrew Tall explains the different ways that a revenue deduction can be claimed for ‘typical’ intangible fixed assets (ITFA) used by a company in a taxable business, as introduced in Finance Act 2002 and subsequently amended.

This PDF guide provides detailed guidance covering:

• the pre-2002 regime,
• the ITFA regime,
• relevant assets between 2014 and 2019,
• relevant assts acquired after 1 April 2019,
• restricted assets under Finance Act 2020,
• dates that ITFA are created,
• ITFA and accounting standards, and
• suggestions.

The TAXguide, which replaces TAXguide 05/19, also includes three appendices offering examples of tax classification of ITFA and of the restricted asset legislation.