VAT-registered businesses in the UK are being urged to get ready now for major changes to value-added tax return filing and payment coming into force next April.
HM Revenue and Customs (HMRC) has sent a leaflet to all 1.9m VAT-registered businesses to alert them to the fact that, from April 1, 2010, those with an annual turnover of GBP100,000 or more (excluding VAT) will have to file their VAT returns online and pay their VAT electronically.
Under the changes, businesses registering for VAT on or after April 1, 2010 will also have to file their return online and pay electronically, whatever their turnover.
HMRC’s Stephen Banyard commented that online VAT filing will have a number of benefits for companies because "it’s secure, convenient, does arithmetical checks and calculations for you, and provides you with an immediate online acknowledgement that your online return has been safely received by us".
HMRC will also be sending formal letters, in February 2010, to all existing businesses affected by the new online filing and electronic payment requirements, confirming that in future they must file online and pay electronically.
From April 1, 2010, a letter explaining the requirement to file online will be included in all registration packs issued to newly registering VAT businesses.
The HMRC mailing also carries a reminder of two other changes coming into effect on January 1, 2010 – the reversion of the standard rate of VAT to 17.5%, and changes to EU cross-border VAT rules.
The changes to the cross-border VAT rules announced in the 2009 budget represent a significant reform of the VAT regime applying to services, and introduce important changes to the intra-EU reporting regime for goods.
The changes, adopted by EU Finance Ministers in February 2008 and December 2008 will modernize and simplify the current rules relating to cross-border supplies of services, and make the recovery of VAT on purchases made in other EU countries more efficient. They will also help to counter fraud.
Businesses affected by these changes include those supplying and receiving services to and from overseas businesses, supplying goods to other EU countries, and wanting to reclaim VAT incurred in another country.
HMRC warns that, to comply with the new rules, businesses will need to make "fundamental changes" to their current VAT accounting and reporting processes in order to be ready for January 1, 2010.
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