Changes in VAT place of Supply rules!

VAT place of supply rules changes from 1 January 2015

Andrew Webb, Senior VAT Policy Manager at HM Revenue & Customs (HMRC), explained on the changes to the EU VAT place of supply rules for B2C digital service suppliers.

The changes will be implemented from 1 January 2015 to the European Union (EU) VAT place of supply of services rules involving business to consumer (B2C) supplies of broadcasting, telecommunications and e-services i.e., digital services.

VAT Moss Business to consumer supplies of digital services

What are the changes being made to the VAT place of supply of services rules?

On the 1st of January 2015, the EU Vat place of supply, and therefore taxation rules are changing, so that from that date the place of taxation will be where the customer lives, rather than where the supplier of the service is established. It's the final change in a series of changes to embed the idea that, with consumption taxes such as VAT, the place where the tax is paid should be where the service or goods are enjoyed, consumed or used.

What does it mean for the businesses affected?

It imposes on them an obligation to register for VAT where their customer is located. It also means that they have to collect information to define where their customer is actually living and the VAT rate in that Member State.

What can a business do if it doesn't want to register for VAT in every Member State where it supplies a service?

It can make use of a new service introduced on the 1st January called the VAT Mini One Stop Shop, or MOSS. With the MOSS, the business will only need to register in one jurisdiction and make one MOSS VAT return, one MOSS Payment to cover all of its obligations across the whole of the EU.

How can a digital service supplier register for VAT in the UK?

First of all register with HMRC through the gov.uk website.

Then, once registered, the business will collect the information about the supplies it's making to the customers. At the end of each calendar quarter it will submit its single return to us and its single payment, and then it can leave it to HMRC to do the rest.

HMRC will split the payment and the return and send it to the appropriate Member States where the consumers live.

Check the website for more information - http://www.hmrc.gov.uk/posmoss/

Are you still not clear on the changes? We are always happy to help you.
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Focus On Customer Frustrations & Your Profits Will Take Care Of Themselves!

We recently returned from a week’s holiday in Turkey. I love spending time away with the family—these days it’s the only real quality time we get together. Plus, it gives me time to catch up on reading. I often read what I consider to be  ‘classics’ again and again. One of those books is  ‘Broken Windows, Broken Business’ by Michael Levine. I read it again in Turkey.

The book focuses on the principle that neglecting ‘small’ problems ultimately ends in anarchy. It was a principle founded by James Q. Wilson and George L. Kelling in 1982 and put into practice by mayor Rudy Giuliani in 1993. He basically cleaned up New York with his tough stance and zero tolerance on the ‘small’ crimes such as graffiti and prostitution. The results are well documented and now New York is a transformed city (I actually haven’t been to New York for over 20 years, but I’m returning there on business in a couple of days’ time). The philosophy is that even if there’s just one broken window in an area, if that window isn’t repaired quickly, people will assume no one cares and this leads to more broken windows and so on. Within a relatively short period of time a once-peaceful, clean and smart neighbourhood can be ruined. 

This is what happened to New York in the 70s, 80s and early 90s. Now it’s a wonderful city and it’s booming.

So Michael Levine’s book takes this same philosophy and applies it to the business world. I agree with it 100%.

You don’t need to be a rocket scientist to recognise that many businesses fail or don’t reach the heights they could because they don’t focus on the small problems, irritations and frustrations (broken windows) of their clients or customers. Thing is, if the owners aren’t bothered, this permeates throughout the organisation (more broken windows) and ultimately the customer goes elsewhere.

You know this is true just from your own experiences. The key is to  make  sure  that   whenever  you spot a broken window, it’s fixed. And fixed immediately.

That shows your whole philosophy and approach to any broken window and again it will permeate throughout your business.

The hotel we stayed at in Turkey is a fine example of ‘fixing’ the broken windows.

Here’s two great but very simple examples of how the Voyage Belek Golf & Spa has fixed two very common broken windows…

Let me begin by saying we are very fortunate that we can holiday in fine hotels.

The Voyage Belek is one of them but this is the first time I’ve stayed at any family hotel that has taken note of and fixed a couple of common frustrations (broken windows) that virtually every family must encounter often.

First, around all the pool areas they have an abundance of sun loungers and parasols.  This is a big hotel. But there are more sun loungers and parasols than guests.

Joy. 

No more getting up at silly o’clock to ‘reserve’ parasols and loungers (there are 5 of us, so making sure we’re all together is an important part of our holiday—we don’t want to be walking too far to throw mum in the pool!).

And whilst getting a parasol is not as important to us now (my children are aged 17, 14 and 11), we do want one between us. Again, no hassle at any time of the day.

So by taking away this key frustration, the hotel have completely extinguished a big problem that virtually every average, good, very good and excellent hotel faces every single day.

There are no losers, just winners all round!

Second, they give you as many pool towels as you want. They don’t count them out and don’t count them in. You don’t need ‘towel passes’ or anything like that. You can change them at any time of the day and you can change them as often as you want.

What a breath of fresh air this is. Once again the hotel has taken away another key frustration and benefitted accordingly.

The lesson is insightful.

It doesn’t matter what industry you’re in, you can easily replicate the ‘broken window’ philosophy! What broken windows can you fix in your business right now that will have a similar effect?

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RTI Penalties Start October 2014!

Since 6 April 2013 employers have been reporting PAYE information to HM Revenue & Customs (HMRC) in real time. You may see this referred to as Real Time Information - or RTI.

This means you must set up payroll records for the new tax year using payroll software, some of which is free. It makes PAYE submissions to HMRC be updated in real time, every time you pay your employees.

Earlier this year, HMRC announced that the penalties for late returns of payroll information (RTI) would start from October 2014 instead of April 2014. If you operate your own payroll, make sure that your RTI submissions are made on time to avoid an automatic penalty.

Remember that the RTI submission should normally be made on or before the date when the wages or salaries are paid to the employees.

Check for more information about PAYE payments and deadlines and penalties at http://www.hmrc.gov.uk/payerti/paying/deadline.htm

Employee Engagement & Turnover!

We all know that the best employees are engaged and highly motivated. However, most businesses don’t consider the relationship between employee engagement and turnover. Research shows that companies with highly engaged employees experience higher employee retention rates, improved profitability and better overall effectiveness.    Contrary to popular belief, those leaving at the greatest rate are not necessarily those who are the least engaged. It is those with average engagement, the passively engaged staff that leave. These employees are the solid workers that contribute reasonably well to the business. They leave because they are "looking for something better" and when they leave, they take their knowledge and abilities with them. Unfortunately, those with low levels of engagement are very often the ones who stay in the firm. Why? Because they've landed the perfect job! They are satisfied and are collecting a pay cheque each month. By measuring and making some targeted changes, employees with average levels of engagement can often join the ranks of the highly engaged. With this come the benefits of higher profit and higher productivity.

Consultation On Possible Changes To Rules On Employee’s Travel

Many employees and employers find the current tax rules for dealing with travelling and subsistence claims difficult to understand. This is an area that the Office of Tax Simplification is seeking to make more comprehensible.  Consequently, the treasury are consulting on possible changes to the rules, and the way that such expenses are reported. The government intends for any new rules to reflect, rather than drive, commercial decisions and that it will be responsive to 21st century working patterns. As is currently the case, any new system would not provide tax relief for private travel or ordinary commuting.

Note that unless the employer holds a dispensation from reporting such expenses, they need to be included on the employee’s or director’s end of the year Form P11d.

If the tax rules or reporting requirements change, we will get in touch to explain the implications for your business.

Business Travel For Self Employed Traders

Following a recent case in front of the Upper Tier Tax Tribunal involving a doctor with a private practice (Dr Samadian), HMRC are applying the rules for business travel much more strictly.

The “wholly and exclusive” principle states that where there is both a business and a personal reason or benefit in meeting an expense, there is no tax relief for any of the expense. The doctor in question argued that as he was based at home (where he saw some of his patients and ran the business), the expenses of traveling to and from various hospitals and nursing homes should be an allowable business expense. Based on earlier cases, the Tribunal decided that the “habitual” journeys to two hospitals should not be allowed but less regular “itinerant” journeys to other locations would be allowed as a deduction.

Although this case involved a doctor, it has wide ranging implications for other self-employed individuals who operate their business from home and travel regularly to one or two locations. It will become increasingly important to keep a detailed mileage log of business journeys should HMRC challenge the deduction in the business accounts.

Do you still have questions regarding Taxation and Expenses? Feel Free to Phone us on 020 89310165  Now or Arrange a FREE No-Obligation Meeting with us.

Remember Your Clients - Or They Will Forget About You!

If you don’t ask you don’t get! Just because you're good at what you do, it doesn't mean you'll get referrals for new business. Many business owners know that the best source of referrals is from satisfied clients. They go about doing great work and making their customers happy, then wait for the referrals to come in.

To a degree this works, depending on your business and its reputation in the market. However, this alone does not generate enough new referral work. The problem is that receiving referrals is more important to you than giving referrals is to your past clients. Clients may love working with you, but may be too busy to pass your name along.

Asking for referrals is a good place to start. You might mention it in a phone call or email as a natural part of the work you do together. You can have a form on your website or in paper form that clients fill out when they start work with you. It doesn't matter what you do, just as long as you have integrated it into your business system.

If you don't remember past clients, they certainly won’t remember you. When you stop working with a client, they don't have a reason to think about you anymore. If you want them to remember who you are, keep in touch with them. This is easy to do with ongoing clients. If you work with them every month, they will naturally remember you.

Stay in touch with former clients with regular email marketing, an invitation to an annual client event or perhaps a message through social media. You could consider following them on Twitter as they may follow you back.

The key is to keep in touch with previous clients through scheduled email / marketing. Quarterly or twice yearly contact is often enough, and don’t forget to ask for a referral. Make sure you get the message right rather then being too pushy.  Something along the lines of, “Business is going well. We are always looking for more. If you would like to refer a friend or contact to us we will look after them as well as we looked after you…”

Please feel free to post your thoughts and comments to make us better.

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