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Specialist accountants for UK contractors and freelancers

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By PaperRocket Accounting, Feb 13 2019 01:16PM

With just over a month to go until the UK is meant to leave the EU, and the government and Brussels clearly struggling to agree on any sort of deal, the likelihood of us leaving with no deal is increasing daily. However, the uncertainty that comes with leaving with no deal is leaving UK businesses in somewhat of a state of confusion about how things are going to move forward.

And then, three days after we (potentially) leave with no deal, Making Tax Digital (MTD) is being brought in, on 1st April 2019. We looked at the full details of MTD in a previous blog, but essentially, every business over the registration threshold must have software that can transfer VAT data directly to and from HMRC’s systems.

This has left many industry experts, and business owners, concerned that this is simply going to be too much change, in too short a time.

HMRC’s deputy chief executive Jim Harra, has stated that their MTD “system is already live and by the end of February we’ll have written to every affected business encouraging them to join the thousands of others who have registered”, then adding about Brexit that “HMRC already has a system to handle customs declarations in the event of a no-deal exit and is rolling out a new customs declaration service alongside this. In August 2018 it was announced that postponed accounting for import VAT will apply to all imports in the event of a no-deal exit, so businesses will not experience a cash flow disadvantage from changes to VAT rules.”

However, experts are sceptical. ACCA’s head of tax, Chas Roy-Chowdhury, says “while the government’s aim is to keep VAT procedures as close as possible to what they are now, there’s a strong possibility that things will change and that more guidance is to come – for example, with the land border between Ireland and Northern Ireland. This is still hazy, and we look forward to the government’s “more information in due course”.”

HMRC’s VAT guidance has stated that if there is a no deal Brexit, the remaining EU members will be treated as third countries, and have said that they will provide additional guidance in due course confirming the exact accounting rules. VAT businesses will also need to prepare for the possibility that some member states may stop refunding VAT at all to the UK (a change from the current situation when businesses can obtain refunds through a simple single market mechanism). And after all of the problems when payroll RTI was introduced back in 2013, the concern is that whilst UK businesses may be unprepared for the no deal Brexit/MTD combo, HMRC may be as well!

Late last year, a report by the House of Lords Economic Affairs Committee urged the government to delay the roll out of MTD by a year, in part due to the concerns over the short amount of time between Brexit and the MTD roll out. Both IPSE and the ACCA support this proposal.

However, as it stands, there has been no announcement of any delay, and as far as we can tell (without help from a crystal ball!), it looks as though both MTD and Brexit are both going full steam ahead.

PaperRocket Accounting provide accounting and tax services to professional contractors and freelancers working in the UK.

We offer our clients a flexible choice of fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.

Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.

We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.

To find out how we can help you please get in touch now.

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