The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.
This guidance note provides an overview of how to operate the annual accounting scheme. This note should be read in conjunction with the Overview of the annual accounting scheme guidance note.
When a business joins the scheme, the first day of the current VAT return period is normally the start of the annual accounting tax year. However, if the business applies to use the scheme late in a VAT return period, the first day of the annual accounting tax year will most likely start at the beginning of the next VAT return period. Please see Example 1.
The annual accounting year will normally finish on the last day of the month, normally 12 months later. However, businesses can request that the annual accounting year is aligned with their business accounting year end or takes into consideration any busy or slack trading periods. The first annual accounting year may therefore not be 12 months long, if the business requests a date that coincides with its chosen date. It should be noted that if the first annual adjustment year is less than four months, HMRC will not expect the business to make any interim payments. Please see Example 2.
A business is entitled to request that its annual accounting year end is amended once it is in the scheme. This will result in the business being issued with one of two short period returns during the change to the new year end date because it is not possible for the annual accounting
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The substantial shareholding exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. Conversely, if losses are generated by the disposal and the SSE conditions are
‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
Summary of capital allowances on carsThe current capital allowance rates applicable to cars are as follows:Pool typeDescription of carRateLegislationMain rate poolNew and unused cars with CO2 emissions over 50g/km but not more than 110g/km (to be reduced to 50g/km and below from April 2021)18%CAA
Expenditure of a capital nature is not allowed as a deduction when calculating trading profits. Expenditure of a revenue nature is allowable, provided there is no specific statutory rule prohibiting a deduction and the expenditure also satisfies the wholly and exclusively test. See the Wholly and
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