• Are you on top of indirect tax changes? Changes in VAT and other indirect taxes for 2023
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Are you up to date with indirect tax changes? Changes in VAT and other indirect taxes for 2023

15 November 2022

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:

 

1 January 2023

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 penalties for a first late payment in 2023 to enable taxpayers to get used to the changes.

 

31 March 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 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.

 

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.

 

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.