With the new year almost upon us, there is one thing no one is looking forward to – an increase in the rate of VAT. As of the 4 January 2011 the rate of VAT will increase by 2.5% to 20%.

This was the preferred route by the new coalition Government to raise public funds, as opposed to the alternative – a hike in income tax.

The increase in VAT may have a noted impact in the difference between a company’s input and output tax. This is often a primary consideration when a business decides whether or not to become VAT registered. Advice should be taken, especially if your customers are the general public.

Care should also be taken if you invoice for goods or services prior to 4 January 2011 and deliver them afterwards.  Services provided prior to 4 January 2011 should be taxable at 17.5%, but again if you bill after 4 January 2011 for these services you should take advice.

Merry Christmas to all from Eaves & Co Specialist Tax Advisors

Eaves & Co, Leeds, have recently been appointed as tax advisor to a business in a chain of suppliers to prove their case as an innocent trader, in relation to an alleged VAT carousel fraud by another party.

HMRC say that a supplier, some way up the chain from our client, has fraudulently avoided paying VAT over to the authorities. Our client states that they knew nothing of the fraud and have asked us to prove that they are an innocent trader.

The matter continues.

Eaves & Co, Specialist Tax Advisors, Leeds

Penalties for late Construction Industry Scheme (CIS) contractor monthly returns are due to change from October 2011 onwards.

The new penalty regime could produce lower penalties than those under the current rules. A key change will be for new CIS contractors who will now have an upper limit to some of the penalties that are charged.

The upper limit will apply when new contractors first send a monthly return, where that return and any other late monthly returns that are submitted at the same time.

The new penalties do not start until October 2011, however, any contractor who is liable to penalties for filing a late monthly return prior to October 2011 is entitled to request that HMRC calculate the level of penalties under the new rules.  If this is less than the amount already charged, HMRC should agree to reduce the penalties to the lesser amount.

Eaves and Co Specialist Tax Advisors in Leeds are experienced in the construction industry scheme penalties and enquiries can assist in corresponding with HMRC to ensure the best position for our clients.