Month: January 2023

The VAT default surcharge regime has been replaced by a new penalty system with distinct penalties for late submission of VAT returns and late payment of VAT. Effective for VAT return periods beginning on or after 1 January 2023. Interest on late payments to HMRC and to taxpayers will compute differently under the new method.

What was the old system?

Rather than having a separate late submission penalty. VAT now has a combined late submission and late payment penalty known as the Default Surcharge. A 12-month Surcharge Liability Notice (SLN) is sent after a taxpayer file their first late return. Moreover, Depending on the number of defaults and the company’s yearly sales. The SLN term can extend and penalties of up to 15% of the tax owed can impose.

What is the new system?

The new penalty point system for late VAT returns, which expect to implement across all taxes in due course, intende to be less harsh in cases where the taxpayer misses a rare deadline. HMRC will assign a taxpayer one point for each missed filing date, and your points for late returns will expire after the appropriate period has gone unless you exceed the penalty levels. Moreover, Points can now award late nil and repayment returns, which is a significant new improvement.

Late filing of VAT returns:

This section will use a points-based system, which means that even if there is nothing to declare, a penalty point will assign each time a business fails to submit its VAT return on time, and once the penalty points threshold is met (which is based on the frequency of a business’ VAT returns), penalties will assign. This will begin with a £200 penalty and increases by £200 for each consecutive late submission.

 

Submission frequency	Penalty points threshold	Period of compliance
Annually	2	24 months
Quarterly	4	12 months
Monthly	5	6 months

Can you reset the points clock?

All points remove from the system after two years, and you can also have your penalty points reset to zero if the following requirements are met:

• Ensure that your subsequent VAT returns are submitted on or before the due date for your compliance period.
• Make sure that HMRC has received all VAT returns that were due in the last 24 months.

Late payment of VAT return liability:

Because default surcharges were also based on percentages, this will be more familiar. The updated mechanism, on the other hand, intends to be more equitable than its predecessor in that it encourages taxpayers to pay their VAT debt sooner by offering reduced penalty rates for making earlier payments. As a result, Some may recall that the current method applies a fixed percentage regardless of how close to the due date the VAT return payment make.

What factors use to determine the exact amount of the fine?

Length of time overdue	Penalty
Up to 15 days	There will be no penalty if the VAT is paid in full by day 15 after the due date or a payment plan is agreed on or between days 1 to 15.
Between 16-30 days	A first penalty will be calculated at 2% on the VAT owing from day 16 until day 30 (after the due date for payment).
31 days or more	Additionally, if there is still VAT owing after 30 days past the due date, a second penalty will then become payable and is calculated at a daily rate of 4% per year for the duration that the outstanding balance remains.

Period of grace:

Moreover, to help businesses adjust to the new rules, HMRC will waive the first late payment penalty for the first year (1 January 2023 – 31 December 2023), as long as the VAT pay in full within 30 days of the payment due date.

Is there any Interest charged on the penalty?

Interest on overdue payment of VAT will continue to charge interest at a rate of 2.5% over the Bank of England base rate and will continue to accrue even in circumstances where a time-to-pay arrangement has been put in place.

Moreover, VAT surcharges and penalties imposed by HMRC may be successfully challenged.

A situation where surcharges can appeal:

Default Surcharges can appeal where there is a ‘reasonable excuse’ for the VAT return being sent in late or payment being made late.

Moreover, HMRC will not often accept a lack of funds as a valid reason for non-payment, but if it can demonstrate that unusual circumstances, such as fraud or delayed refunds from other taxes or HMRC, are the cause of non-payment, this can consider a valid excuse.

• Other examples of ‘reasonable excuse’ include:
• Issues with the HMRC online system
• Illness of key personnel in the business
• Loss of records
• Issues with hardware/software
• Fire or flood at the premises
• HMRC failed to action changes requested in good time due to Covid and other reasons (i.e. updating a VAT group)

Next Step:

Furthermore, If you are looking to know about the new VAT system, please feel free to Book a free consultation now.

 

 

 

The childcare sector is bracing for financial cuts. Despite the recent Autumn Statement’s pledge of support. The childcare sector is bracing for financial cuts and a drop in the supply of nursery seats, resulting in a rise in childcare costs.

The childcare sector is facing a crisis as a result of the Government’s austerity policies. Which have resulted in funding cuts and a reduced supply of nursery seats.

A spokeswoman from the Department of Education emphasized that. They committed to assisting parents in finding convenient and affordable childcare. They are currently looking into a variety of options. Including increasing the cash granted to local governments in order to increase the fees paid to childcare providers. Additionally, extra funding offering to early-year childcare providers to cover their energy costs.

Parents Struggle with Higher Childcare Costs and Fewer Preschool Seats Despite Promised Educational Funding Boost

Despite the Chancellor’s assurances of additional educational funding. Parents are facing higher childcare bills and fewer preschool seats as the sector suffers yet another round of budget cuts. In the recent Autumn Statement, Jeremy Hunt announced an additional £2.3 billion per year for the next two years. Claiming that the Government could not be “pro-growth” unless it was “pro-education.” However, the new monies are virtually completely for the core school budget. Resulting in a £500 million decrease in real terms over the following two years due to inflation. This regard is especially harmful to the childcare sector. And the Government has been held accountable for delaying £1.7 billion for its free childcare allowance, resulting in price increases.

According to Treasury data, daily education spending outside of core school budgets expect to reach £23.9 billion in 2022/23, then fall to £23.8 billion in 2024/25. This decline in actual expenditure has parents concerned about growing prices. And a shortage of available housing in some locations, preventing them from returning to work. Since August 2020, almost 400 nurseries have closed, and the overall number of childcare providers has decreased by 11% in two years.

Conclusion 

According to a Coram Family and Childcare survey, childcare expenses have risen by £600 since 2021 for those paying for 50 hours per week. According to a Department for Education spokesman, the government committed to making childcare more affordable and flexible for parents, and it has increased funding to local authorities for hourly rates to childcare providers, as well as providing more support for early years providers with their energy costs.

Next Step:

If you are looking to know how you could survive as nursery business, please feel free to Book a free consultation now.

 

Whether you are a small or large company, running a business is never easy. It requires constant innovation and staying ahead of the curve. In this digital age, where competition is at an all-time high. It’s almost impossible for a business to stay on the market without constantly updating its services and products to match the latest trends. Running a sustainable business model isn’t always easy. And there are numerous challenges that you will have to face along the way. But if you work hard and pay attention to the details. You can make a business model that will last and keep as much value as possible for your company in the long run.

Create Inclusive Growth

You should always remember that your customer base is probably not the same as the next person’s. In order to serve the needs of your customers. You will have to understand them and their needs. This means that you will have to put in a lot of effort to understand your consumer better. And see if they have any unmet needs that you can help them with. This way, you will be able to create an inclusive growth strategy that will allow you to retain as much value for your company as possible.

Research and develop your own products / Services

In this digital era where competition is at an all-time high, every business is looking to create a monopoly in its respective industry. However, to do this, you will have to research your competitors. Are doing and then developing a product or service that will compete better than theirs. It can be frustrating to see what your competitors are doing and not be able to match their growth. While you are struggling to find your footing in the market. This is where you need to start researching what your competitors are doing and how they are growing. Once you have found an idea that you think can work. You will have to conduct extensive market research to see if you can replicate it. Start by finding a research company that specializes in market research, and then conduct research as to what you should be looking for.

Capitalize on your strengths

As a business owner, you will have to identify your company’s strengths and then take them to the next level. However, this can be a difficult process, as it is easier to keep doing things the same way than to try something new. Identifying your strengths and capitalising on them can be a very rewarding process, but you will have to put in a lot of effort to see the results. The best way to do this is to see what your competitors are doing and then see what your strengths are and how they can be enhanced if you build on them. You can start by identifying your strengths and then categorizing them into specific strengths. You can also tie these strengths to a company mission and see how they can be applied to that mission.

Establish A Clear Path To Profit

As a business owner, you will have to establish a clear path to profit, or else it will be difficult to retain any value for your company. This is important because it is the only way that you will be able to create a sustainable business model. Apart from marketing your company’s products/services, you will have to come up with new ways to create revenue. This can be done by collaborating with other companies and creating joint ventures. You’ll have to keep an eye on your marketing campaigns and make sure that your money is coming from the right places. You will have to keep track of your expenses and see if it is worth it for the company to continue investing in a particular marketing campaign.

Integrate With New Technologies

Technology and the way we do business are changing at an incredible pace. This means that you will have to stay on top of the latest technologies and integrate them with your current systems as soon as possible. This will be beneficial to both your business and the employees that work within it. The best way to integrate new technologies with your business is to keep an eye out for any emerging technologies that can help your business. This way, you will be able to avoid getting left behind. Apart from keeping an eye out for emerging technologies, you will also have to keep track of the latest trends and technologies that can help your business grow. This can be done by following the latest technology trends and staying ahead of them.

As business partners, we do everything we can to ensure the prosperity of our clients.

Next Step:

If you are looking to know more about business sustainability, please feel free to Book a free consultation now.