The new tax year brings a raft of changes for businesses and individuals, including the introduction of IR35, the end of the Making Tax Digital for VAT soft-landing period and Construction Industry Scheme (CIS) updates for VAT.

We round up the essential information you need and show you how BTCSoftware can help you keep up with 2021/22 taxes without adding stress or increasing your costs.

An architect IR35 for contractors and CIS VAT Reverse Charge

IR35 for freelance contractors

After 6th April 2021, the responsibility for deciding if projects fall within IR35 moves to medium or large-sized business. For small businesses, the IR35 status is still established by the contractor.

The impact on Corporation Tax if the freelancer uses a Limited Company as their intermediary can be complex if the freelancer’s work is a mix of inside and outside IR35 work. If you need advice, please get in touch with your accountant (for contractors) or your industry body (for accountants).

HMRC’s guidance says:

“When calculating Corporation Tax liability, your intermediary/the fee payer can deduct the amount of the deemed employment payment and any Class 1 employer’s NICs due on it. This deduction is only allowed when you calculate the taxable profits for the accounting period in which the deemed employment payment is treated as paid.”

BTCSoftware’s Corporation Tax module makes managing returns to HMRC simple, regardless of IR35 status. By providing several data import options, including two-way integrations via Accounts Production, turning income and expenditure information into a fully iXBRL-tagged CT return and submitting it to HMRC is quick and easy.

Making Tax Digital for VAT phase two

Outside of complex post-Brexit VAT rules, a major change to VAT from April 2021 is the end of the Making Tax Digital soft-landing period.

Although most businesses will have already established fully digital links between their record-keeping systems and their VAT return to HMRC, it’s important to note that non-compliance from here on will attract penalties.

BTCHub is the affordable answer to Making Tax Digital for VAT. The system has been designed to support multiple digital record-keeping methods, including legacy bookkeeping software and Excel spreadsheets. That means that accountants avoid the stress of getting their clients to upgrade to expensive bookkeeping software and helps keep business costs low.

Construction Industry Scheme VAT updates

The new legislation for the CIS came into play on 1st March 2021. The change means that VAT-registered contractors in the construction industry must apply the domestic VAT reverse charge on qualifying services supplied by VAT-registered subcontractors.

HMRC’s flowchart for suppliers.

HMRC’s flowchart for buyers.

As BTCHub easily handles imports of VAT returns from any source, the payment of VAT under the CIS domestic reverse VAT charge is easily included in the 9-box total. And for customers using Excel, we’ve released an update to our MTD for VAT template spreadsheet that’s available free of charge -just drop our support team an email or download your copy from the BTCHub log in screen.

Discover BTCSoftware for yourself

Our website has more information on all of our tax and accounts software modules, including Corporation Tax and VAT. You can buy securely online, but if you still have questions you can call us on 0345 241 5030 or book a personal demo.

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