Are you a UK-based business providing services to EU clients? Confused about VAT registration and compliance? 🤔 Don’t worry! Discover how the reverse charge mechanism works and what it means for your VAT obligations in our latest blog. From invoice requirements to VAT thresholds, we’ve got you covered. Simplify VAT Compliance for Your EU Clients with These Key Insights At Rustrick Accountants Limited, we’re dedicated to being your trusted experts for all things accounting and tax related. Our mission is to make VAT and tax compliance straightforward, so you can focus on what matters most growing your business. VAT Registration and Compliance: Essential Tips for UK Businesses If you’re a UK-based business providing services to clients across the EU, understanding your VAT obligations is crucial. Here’s what you need to know when dealing with EU clients: B2B Services (Business-to-Business) When providing services to an EU company (B2B), the reverse charge mechanism generally applies. Here’s how it works: No VAT Charge: You do not need to charge VAT on your services. Instead, the EU company (your client) is responsible for accounting for the VAT in their country. No Need for EU VAT Registration: Typically, you don’t need to register for VAT in the EU. However, you must include a statement on your invoice indicating that the reverse charge mechanism applies. Ensure your invoice includes your UK VAT number (if applicable) and the VAT number of your EU client. Conclusion: Whether you’re a UK-based self-employed professional or a limited company supplying services to an EU company, you don’t need to worry about VAT registration in the EU. The EU company will handle the VAT via the reverse charge mechanism. Just make sure your invoices are correctly formatted and that you comply with any UK VAT requirements. Outside the Scope Sales It’s also important to note that sales to your EU clients are "outside the scope" of UK VAT, so they don’t count towards the £85,000 threshold for VAT registration. However, any other UK-based sales within the scope of VAT will contribute to this threshold.  Why Partner with Rustrick Accountants Limited? Navigating VAT regulations can be complex, especially with cross-border transactions. That’s where we come in. At Rustrick Accountants Limited, we provide expert advice and hands-on support to ensure your business remains compliant without the stress.

There will be a new Budget on the 30th October 2024 and there is an anticipation of Capital Gains Tax rates increasing. This will mean that there will be an increase in voluntary liquidation. We are hoping that any changes made by the Budget will not take effect until the new tax year, but it is much better to be prepared now! Why would you consider MVL? Usually, it is used where a successful business owner intends to close a company to gain the benefit of a capital distribution from a liquidator and, often, Business Asset Disposal Relief too. If you feel like MVL would be beneficial for your business, then consider these points: - Your accountants will need time to prepare the final full set of accountants and then the directors will need to settle all creditors before liquidation. - When the company is in liquidation, you must advertise a notice to creditors for a minimum of 21 days before making a distribution to shareholders - MVL will be implemented quickly only if the company has no creditors and only cash! As you can see, it does take some time, so start thinking about it today and get in contact with us now to talk through the procedure and first steps. If you want your shareholder distribution to be made before the new Budget, the formal liquidation needs to be started by Friday 27th September. Of course, the Budget has not been announced yet and it is inevitable there will be delays so nothing is set in stone, but it is essential that we get the ball rolling to make the procedure as stress-free as possible!  Give us a call on 01622 738165 and talk to one of the team at Rustrick Accountants who will be more than happy to talk you through the steps and whether MVL would be beneficial for you!

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95% of businesses are throwing money down the drain when it comes to utility bills- and water bills make up the majority of this! Did you know that an average person uses 1,000 litres per week? So, when you think about a whole business and how much water it would use, you can see how the money adds up! Thames Water suggests that up to 25% of water supplied to business customers could be leaks. When Thames Water visited businesses, it found that the average leaky loo in business properties loses over 2,000 litres per day and uncontrolled urinals lose approximately 1,800 litres per day! The cause of the leak is usually the mechanical flush valve- seal degradation, faulty fill valves and faulty dual flush valves. A leak needs to develop to 300 litres per day before it is visible, audible or leads to higher bills. This means that 215 to 400 litres of clean drinking water is wasted per toilet every day. What should you do today? Put a sheet of toilet paper on the back of the bowl (above the water) and if it gets wet then you might have a leak! If you can find the cause of the leak, fix it straightaway as it will be costing you money right now! Many water companies will come and fix leaky loos for free!!  Toilets are not the only area to look at when it comes to saving water. Start by asking yourself: do you know how much water you are currently using? Do you know how much this is costing you? If you can work out what your expenditure is, we can help you figure out how to cut that number down! Just give us a call on 01622 738165 and talk to the team today to find out more!

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The more expensive your company car is, and the higher its CO2 emissions, the greater the tax bill is for you and the NI bill is for your company. To reduce both bills you can contribute to the car purchase- remember, the higher the tax and NI, the greater the savings. The maximum contribution that affects the tax and NI payable on a company car is £5,000 (anything higher will not have an effect!). You can borrow up to £5,000 interest free from your company to contribute to this payment. After three years, if your company sells the car and uses the proceeds to reduce the loan and write off the balance. So, for a car that costs £40,000 the net tax and NI saving is more than £1,000!  To find out more information and to see how we can save you money get in contact today on 01622738165!

Did you know that you can make gifts during your lifetime that can affect the inheritance tax (IHT) payable on death? The rule is; gifts by one individual to another during the seven years before they die become liable to IHT. Completing IHT forms requires executors to look through the deceased’s financial records for at least seven years before the death to look for gifts. These are then recorded on the IHT forms, specifically the IHT403. On the IHT403, HMRC states “Do not tell us about any gifts where the total value was £3,000 or less in any tax year, small amounts of £250 or less”, however if cash gifts of £3,000 or less are ignored, then the “normal expenditure out of income” exemption will be overlooked (This exemption must be “normal expenditure” which means that it must be gifts that form a pattern over multiple years). This means that HMRC will be demanding IHT that it wasn’t entitled to!  This can get quite confusing, let us look over your IHT form or set up a plan to ensure you get the “normal expenditure out of income” exemption! Give us a call on 01622 738165 today!

Dividends are paid to shareholders from the current year profits (usually!). According to the Companies Act 2006, dividends can only be paid from distributable profits. When a company pays dividends without sufficient profits, this makes them illegal dividends. Any director authorising illegal dividends will have to repay the dividends as well as any shareholders who knew or suspected those dividends were illegal. Previously, HMRC argued that unlawful dividends were salary payments (because this meant greater tax liability!) but now, HMRC are more willing to treat them as director’s loans. The unlawful dividends must be attributed proportionally to each shareholder and recorded as a loan in the company’s records. Shareholders must repay the loans (but there is no specified deadline!). However, if the loan is not repaid within nine months after the company’s accounting period ends, the company will face a corporation tax charge of 33.75% on the outstanding amount. If a single shareholder owes the company more than £10,000 (including any other amounts owed) a taxable benefit in kind applies. It is also possible to waive the outstanding loan to avoid any illegal dividends, but this may lead to taxable consequences! To find out more and to avoid the chance of illegal dividends, get in contact today on 01622 738165 and the team will be more than happy to help!

Are you a sole trader? Did you know that you can save income tax by transferring your business to a company? But watch out- this will trigger other taxes! A sole trader can transfer their business to a company, this is called incorporating. This will save you income tax but may trigger capital gains tax (CGT). To get over this hurdle you can make a special CGT claim. If you transfer land/buildings to a private company (which you own/control a significant chunk of), the share capital is seen as if it were a sale at market value with your company as the buyer. This means that it is liable to SDLT (Stamp Duty Land Tax) if the value exceeds the nil rate band. A simple solution to this would be to not transfer the property and instead keep personal ownership (in the future this may mean you miss out on tax savings though!). Did you know that there is also a clause within the SDLT rules which allows a partnership which transfers land/buildings to a company to escape SDLT? This works by reducing the amount chargeable to SDLT in proportion with the partners connection with the company. So, if the partner owns or is connected to 50% of the company, then 50% will not be subjected to SDLT. Spouses, civil partners and close family are classed as connected persons, so if a married couple are in partnership and property is transferred to a company, only one of them needs to be connected to obtain this SDLT relief.  Get in contact today and we can talk through the rules and guidelines when it comes to SDLT as HMRC can be quite strict! Give us a call on 01622 738165 today!