Ambition Issue 45 (March/April 2021)

Page 78

Columnist Maybeth Shaw, Managing Partner, BDO Northern Ireland

Tax: Are You Ready For April 2021? BDO’s Maybeth Shaw discusses how tax will be affected by Brexit and what steps businesses need to take.

Digital for VAT requiring taxpayers to implement digital links through their systems, in order to create the so-called unbroken electronic chain of information from the accounting system to the VAT return. These requirements take effect from the first VAT accounting period starting on or after 1 April 2021, depending on exact circumstances, and it is advised that bridging software will not solve this issue. Additionally, businesses will need to take into account new IR35 rule compliance (from 5 April 2021), EU e-commerce reforms (anticipated in July of this year including changes in how VAT is accounted for on cross-border B2C supplies) and the potential implementation of a new online sales tax (a 2% sales tax which may be levied on online businesses, or as a potential new tax on consumer deliveries with a view to levelling up the playing field between online businesses and those with bricks and mortar) when reviewing their strategic operations. With domestic and international tax legislation constantly evolving and tax authorities around the world becoming more vigilant, it is easy to see why getting your tax affairs in order, sooner rather than later, is so important.

B

usiness leaders continue to face unprecedented change and transition as they respond to current pressures, both internal and external to the business. Tax continues to be a key consideration for all business leaders and it has played a major and often decisive role in the business response to the demands brought about by both the COVID-19 pandemic and the Brexit transition process during the last year. For example, VAT payment deferral schemes, reduction in VAT rates for the hospitality and leisure sectors (at the time of writing this is to end on 31 March) and significant changes in HMRC policy, not to mention the raft of ongoing Brexit implications that require urgent and for some, daily, attention including customs, VAT registration requirements, Incoterms, VAT accounting under the NI protocol etc. All of this has shone a light on the existing challenges that businesses face in dealing with tax matters – and how they manage these into the future. Whilst we cannot see into the future, we can say with a degree of certainty that these challenges are likely to remain. Governments will eventually withdraw the COVID-19 reliefs and indeed they will look to raise taxes to reduce the huge deficits created. This means that businesses will need to keep a sharp focus on cash outflows – of which total tax will remain one of the largest – as they try to build resilience and prosper in the future. We know that the next six months and beyond will yield further change in the world of tax, including a number of measures that have already been announced. Many of these changes are wide-ranging reforms that will impact business across the board, so it is imperative that businesses are ready for them. For example, HMRC revised its guidance on the VAT treatment of early termination fees and similar compensation payments last year and this is likely to be subject to further refinement going forward. HMRC has stated that this will impact anyone who charges their customers to withdraw from agreements, but we believe that the impact is likely to be more extensive than this. Another tax reform affecting a large proportion of our local business community here in NI is the domestic reverse charge within the construction industry. By the time this article goes out, this new reform will have already come into force (1 March) and will have a significant impact on the accounting practices and cash flow of businesses in the sector. Next month (April) will also see the next stage of Making Tax

If you have any questions regarding any of the changing tax reforms or would like to discuss how BDO can help your business, please get in touch with our leading team of tax experts at www. bdoni.com.

“Next month (April) will also see the next stage of Making Tax Digital for VAT requiring taxpayers to implement digital links through their systems, in order to create the so-called unbroken electronic chain of information from the accounting system to the VAT return.“

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Articles inside

Jim Fitzpatrick

8min
pages 98-100

Fashion - Joanne Harkness

5min
pages 95-97

Dine & Wine - Chris Rees

2min
page 94

Gerry Rourke

7min
pages 92-93

Fastest Growing Companies Forestside Announced as New Sponsor of Arts & Business NI Awards

3min
page 91

Business Class Motoring

7min
pages 88-90

Gabi Burnside

4min
pages 86-87

Breath of Fresh Air

5min
pages 74-75

Brendan Drain

4min
pages 82-83

Maybeth Shaw

3min
page 78

Helen Hardy

3min
page 76

Charles Hurst Announces New Chief

1min
pages 84-85

Unprecedented Change by

8min
pages 70-73

Danielle McWall

4min
pages 68-69

Stairway to Seven

2min
page 67

Why is COP26 Relevant to You?

6min
pages 64-66

Openreach NI Receives its First

2min
page 63

Kate Marshall

4min
page 62

Sustainable Solutions

5min
pages 58-61

My Ambition is to

2min
pages 56-57

Swift Response

5min
pages 54-55

Martin Breheney

2min
page 53

Righting the Way Forward

5min
pages 50-52

The Drive for Equality

7min
pages 46-49

Membership NI Chamber in Conversation With

11min
pages 32-35

John Campbell

4min
pages 44-45

The Work-From-Home Pioneers

4min
pages 36-39

Awards Launched Export Growth for Bloc Blinds

2min
page 43

Harnessing Nature’s Energy

6min
pages 40-42

Patrons Make the Most of Your

6min
pages 30-31

NI Chamber Welcomes New

3min
pages 28-29

CEO Update

5min
pages 26-27

Robert McCullough

3min
page 22

Announces Expansion Belfast Telegraph Business

3min
pages 24-25

Jane Shaw

5min
pages 16-17

A Healthy Response

6min
pages 18-21

Jonie Graham

4min
pages 14-15

BT’s 655m Contribution

3min
pages 10-11

Artemis Technologies Unveils

2min
pages 12-13

Dale Farm Unveils Rebrand

4min
pages 8-9
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