The VAT reverse charge and how it will affect the construction industry

The VAT reverse charge and how it will affect the construction industry

This year could be the most challenging year yet for the construction industry, as HM Revenue and Customs (HMRC) has announced that the VAT reverse charge will commence 1 October 2019.

The Government announced in the 2017 autumn budget statement that they intended to implement a VAT reverse charge scheme.

Further to this, in November 2018, the draft order for the “VAT Reverse Charge for Construction Services” was issued under section 55A of the VAT Act 1994.

HMRC has now finalised and published the technicalities of the scheme, and the new regime is set to go live on 1 October 2019.

The new scheme will mean all VAT being paid between construction firms e.g. contractor to subcontractor and on subcontractor to subcontractor, will be reverse charged. This means that the VAT will not be paid to the subcontractor, it will be paid directly to HMRC.

This will apply to all payments made which operate under the Construction Industry Scheme (CIS). For example, a contractor who owes a subcontractor £100 plus £20 VAT will only pay the subcontractor £100 and will pay the VAT straight to HMRC.

There is a growing concern within industry bodies that the construction industry is neither ready for the logistical requirements of this change, nor the practical commercial consequences.

As a result of these changes, it is likely to impact many companies cash flow and IT accounting systems. Therefore construction firms need to start planning now, to ensure you will be ready and able to adjust when the time comes, get in touch with us today.

Data protection: what happens if we leave the EU without a deal?

Data protection: what happens if we leave the EU without a deal?

UK businesses who share data with organisations in the European Economic Area (EEA) will need to take steps to ensure they continue to comply with data protection laws should the UK leave the EU without a deal.

The warning comes as the Prime Minister fails to get Parliament to agree to her Brexit withdrawal bill, increasing the prospect of a no-deal outcome.

In light of this, the Government has begun to publish an abundance of guidance for businesses, detailing what to do and how to prepare for changes, should we leave with no deal in place.

As part of this guidance, the Information Commissioner’s Office (ICO) has produced a six-step checklist to help businesses to continue sharing data legally after 31 March 2019.

The regulator said the UK does not intend to impose additional requirements on transfers of personal data from the UK to the EEA, therefore organisations will be able to send personal data to organisations in the EEA as they do currently.

However, without a legal agreement in place, transfers of personal data from the EEA to the UK will become restricted once the UK has left the EU.

Because of this, the Government advises that organisations who receive personal data from organisations in the EU should consider what changes they may need to make to continue complying with the general data protection regulation (GDPR) and other legal obligations.

The six-step checklist, found here, may help you navigate this process.

The following guides may also help:

For more help and advice, please get in touch with our expert Brexit advisory team.

 

What happens if I want to prepare my business for sale?

What happens if I want to prepare my business for sale?

Business owners that choose to sell their business will face a number of tax challenges, which is why it is wise to plan ahead well in advance.

It is important to be aware of the rules governing Capital Gains Tax (CGT) in the UK – a tax that sole traders, self-employed business owners and business partnerships will incur on all ‘gains’ when selling or disposing of a business asset, such as land and buildings, plant and machinery, or even the entire business itself.

There are a number of CGT reliefs available to business owners, such as Entrepreneur’s Relief (ER) which can make for some significant tax savings.

ER enables business owners to pay a lower rate of CGT upon the sale or disposal of a business. In instances where ER applies, the rate of CGT is just 10 per cent.

In order to qualify for ER, however, the business must be either a personal trading company or an unincorporated business and a number of complex qualifying conditions need to be met.  It is important that business owners seek tailored advice in this respect – to ensure that the sale is structured correctly.

ER is not the only way in which business owners can benefit from substantial CGT savings when selling or disposing of a business. Depending on future intentions, it may be appropriate to consider roll-over relief, which enables sellers to defer CGT if their gains from a sale are to be reinvested in new business assets, or hold-over relief, which can defer CGT in instances where the business or asset is being ‘transferred’ at under-value as opposed to being sold.

Regardless of your circumstances, seeking appropriate tax planning advice is crucial to ensure that your business disposal is tax efficient.

SG Blueprint: Business Advisory Services to Supercharge Your Business

Running a business is no easy feat, as there is no such thing as a ‘typical business lifecycle’. Unforeseen challenges can arise at any time and against today’s landscape of constant change, it’s now more important than ever before to be able to rise above these. This is where SG Blueprint can help.

SG Blueprint is Smailes Goldie Group’s dedicated Business Advisory service, which can help you to accelerate your growth and profit objectives by continually reviewing and improving a ‘living and breathing’ business strategy.

Similarly if you’re buying, selling or developing a business, planning for succession, want an exit route, or you are reconstructing your business for tax efficiency purposes, it’s vital to have experts who can guide you through the entire process.

Smailes Goldie Group has dedicated corporate finance team who specialise in all areas of financial planning and development.

If you need help preparing your business for sale, please call Smailes Goldie today.