The past few years have been very eventful in Indirect Tax and, so far, 2023 looks set to bring fewer changes than we have become accustomed to. As always, though, we recommend that organisations continue to closely monitor their forthcoming obligations as this pattern could quickly change.
The 2023 changes continue to be driven by the UK adapting its systems, processes and tax regimes to the new environment created by the UK’s exit from the EU.
While some of these changes will impact organisations across the board, others are limited to importers of goods.
We have outlined an overview of the forthcoming changes and the key dates you should be aware of below relating to:
EU’s VAT in the Digital Age (ViDA) package
The European Commission has launched its long-awaited proposals to modernise the VAT rules within the EU collectively known as ViDA. These could have a significant impact on UK businesses trading across the EU from 2025 onwards.
The ViDA proposals consist of three key parts, commonly referred to as:
- The Platform economy
- The Single VAT registration
- Digital reporting and E-invoicing.
The ViDA proposals will now be discussed by the EU Member States and ultimately, they will require unanimous approval by all Member States to come into law. It is, therefore, expected that there will be a number of developments regarding ViDA during 2023.
1 January 2023
Default surcharge changes
For VAT periods beginning after 1 January 2023, the long-standing default surcharge regime applicable to the late submission of returns and/or the late payment of associated VAT will be replaced by a new penalty regime. This will operate a points-based system where points are issued for late filing and upon reaching a threshold a fixed penalty of £200 will be levied. Penalties in respect of late payments will be calculated when payments are outstanding over 15 days and then a daily rate will be applied to any balances outstanding beyond 30 days. HMRC has indicated it will not charge the 15 – 30-day penalty for late payments throughout 2023 (unless any payment is more than 30 days late), to enable taxpayers to get used to the changes.
15 March 2023
Date of Spring Budget
The Chancellor of the Exchequer will provide an update on Government finances and proposals for changes to taxation which may contains updates in respect of VAT and other indirect taxes. While new duty rates usually come in on the 1 February each year, the Government has indicated that this year decisions on duty rates will be deferred until the Spring Budget on the 15 March 2023.
1 August 2023
Alcohol duty reforms
The duty structure for alcoholic products is to be amended to a standardised series of tax bands based on alcohol by volume. Any business involved in manufacturing, distributing, holding or sale of alcoholic products is likely to be affected and should take steps to ensure the impact of changes is understood and any necessary changes are made.
There will also be two new reliefs and a temporary easement as follows:
- Small Producer Relief replaces and extends the current relief for small brewers to all producers of all alcoholic products.
- Draught Relief will reduce the tax rate on draught containers holding at least 20 litres of qualifying alcoholic products.
- The temporary easement will be to assist wine producers and importers in managing the transition to the new method of calculating duty. It is intended to be in place for 18 months.
30 November 2023
End of Customs Handling of Import and Export Freight (“CHIEF”) - Customs Declaration Service (“CDS”) to become sole customs platform
The use of HMRC’s long-standing customs platform, CHIEF, came to an end for import declarations on 30 September 2022 and was replaced by CDS. The use of CHIEF for export declarations will end on 30 November 2023 (having been pushed back from 31 March 2023) and exporters still using CHIEF should take steps ahead of this date to ensure that they are ready and able to make declarations via CDS instead, given the potential disruption to their supply chains.
31 December 2023
Safety and Security Declarations
Having left the EU, the UK has delayed the requirement to complete Safety and Security Declarations (“SSD”) in respect of goods imported from the EU. However, this is expected to end on 31 December 2023 and, whilst submitting the SSD is normally the responsibility of the carrier, businesses will need to be preparing in advance of this to ensure that they have the capacity, resources, and knowledge to provide the information required to the carrier,
Trader Support Scheme (“TSS”) potentially ends
The TSS was set up to assist taxpayers with understanding the rules applicable to the movement of goods between Great Britain (GB) and Northern Ireland (NI) and to provide a portal for customs declarations to be made for the movement of goods between GB and NI. It provides support, guidance and training, including assistance with the completion of import and safety and security declarations. The TSS has been extended to the end of 2023; however, businesses should make plans for the system to end on this date.
End of retained EU law
Under the current wording of the Retained EU Law (Revocation and Reform) Bill, most remaining EU derived law in the UK (a major example of which would be the VAT legislation) will be repealed unless a specific decision is taken by ministers to retain an individual piece of legislation going forward. There is therefore potential scope for changes to occur to the laws governing UK VAT, which have so far been left largely untouched since Brexit.
For further advice – please contact Claire McGuigan, Karen Doherty or Lorraine Nelson.