Highlights from the broader tax news week ending 12 May, which includes resolution of CGT 2021/22 returns issue, a new HMRC service to allow firms to practice making customs declarations, details of new plastic packaging tax, and updates to VAT notices 700/22 and 700/46.
New service lets firms practice making customs declarations
HMRC has launched the Trader Dress Rehearsal (TDR) service that enables businesses to test making declarations ahead of using the Customs Declaration Service (CDS). The free system is available to traders using an authorised software product, a list of which is available from gov.uk. Users will also need an EORI number, have already obtained necessary authorisations and licences, know how to access the CDS and have an understanding of the UK trade Tariff and making customs declarations. Find out more.
HMRC resolves 2021/22 CGT returns issue
One of the issues with the capital gains tax reporting system recently highlighted by the Tax Faculty has been resolved. There was a problem with submitting a return for a disposal in 2021/22 if one had already been submitted for a disposal in 2020/21. When a return for 2021/22 was submitted in this situation, an incorrect calculation was likely to be received. HMRC has now confirmed that this issued was resolved on 5 May.
Eligibility for the agricultural VAT flat rate scheme
HMRC guidance on joining the agricultural flat rate scheme for VAT (VAT Notice 700/46) has been amended to clarify eligibility rules. This follows changes announced at Budget 2020 that apply from 1 January 2021. Additions to section 1.6, which outlines the rules for joining the scheme, confirm that those eligible for group registration, registered as a division or associated with another person in the preceding 24 months do not qualify for the scheme. Read the amended notice.
Details of new plastic packaging tax from April 2022
HMRC has published guidance on the new plastic packaging tax due to come into force on 1 April 2022. The new tax will apply at a rate of £200 per metric tonne to plastic packaging manufactured in, or imported into, the UK where the proportion of recycled plastic used in its manufacture is less than 30% of the total amount of plastic by weight. The new guidance outlines how the tax will operate and support for business to check whether they need to register and pay the tax. It also confirms record-keeping requirements. Read the guidance in full.
Clarity on VAT treatment of blinds following FTT decision
In October 2020, the First-tier Tribunal (FTT) ruled that manual blinds and shutters installed in new build homes do fit the description of ‘building materials’ under the VAT Act 1994. It also ruled that such items did not fall into any of the current exceptions and should therefore be zero rated for VAT purposes. HMRC has now published Revenue and Customs Brief 5 (2021) confirming the change and that in cases where VAT was disallowed an adjustment can be made on the VAT return. Read the brief in full.
VAT Notice 700/22 updated for MTD
HMRC has updated its VAT Notice 700/22 to clarify the Making Tax Digital VAT digital links requirements for customers. New examples depict digital record keeping and reporting options, “illustrating where information transfer must be digital and where it need not be”, as well as different ways customers are compliant with the rules. HMRC also clarifies the relationship between digital records, functional compatible software and the ‘electronic account’ that businesses are required to maintain under the VAT Regulations. All updates take into account that the soft-landing period for digital links expired on 1 April 2021 along with the digital links extension application process, HMRC said.
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