CPA Bulletin

24 CPA Bulletin > November 2020 www.cpa.uk.net Legal NEWS LEGAL: 1 Every organisation which processes personal information needs to pay a data protection fee to the ICO, unless they are exempt. Most companies will only need to pay £40 or £60 a year. For large companies the fee is £2,900. If you need to pay and don’t pay, you could be fined. The fee funds the ICO’s data protection work. If you’ve received an ICO fee letter, you should act now: • If you need to pay, visit ico.orrg.org/fee and click ‘first time payment’ if you haven’t registered with the ICO before, or ‘renew’ if you have registered before. You must complete the online application before sending your payment. It takes about 15 minutes. • If you’ve received a letter from the ICO quoting your Companies House number and you don’t need to pay, complete the form at ico.org.uk/no-fee to let the ICO know why your company is exempt from paying the fee. • If you’re not sure if you’re exempt, you can take an online self- assessment at ico.org.uk/fee-checker . For further assistance, the ICO operates a helpline on 0303 123 1113 or you can visit ico.org.uk/hub to help you understand and comply with your data protection obligations. In the next few weeks, the Information Commissioner’s Office will be writing to companies in your sector to remind them of their legal responsibility to pay a data protection fee. On 5th June 2020, Her Majesty’s Revenue and Customs (HMRC) announced a further delay in implementing the Reverse (Inverse) charging of VAT to 1st March 2021. The reason given for the delay is to allow businesses to deal with the impact of the Coronavirus pandemic. The reverse (inverse) charging applies solely to construction industry services, and only those which are business-to-business supplies - whether VAT is standard or reduced rated - and the recipient of the services is a VAT-registered business. The reverse charging is not applicable to zero-rated services, or where there is no Construction Industry Scheme (CIS) report. However, where there are mixed services supplied to the customer, and any element is a reverse charge construction service, then the whole supply is subject to the reverse charge. One new stipulation contained in the announcements of 5th June 2020 is that end users (described as a business not intending to onward supply the services as part of their business) or intermediary suppliers (described in the guidance as VAT and CIS registered businesses connected or linked to end users), will need to give prior written confirmation on their status to service suppliers, to ensure the reverse charge regime does not apply. The question then is: how does any of this affect plant hire businesses? The supply of plant without an operator, on a self-drive basis, is outside the scope of CIS (unless supplied along with other qualifying construction services), and so the new rules will not apply, i.e. invoicing continues as it currently is. However, should an operator be supplied with the item of plant, then this would fall within CIS, and so reverse charging would apply when the changes come into effect. For example, a mobile crane company supplied a machine and operator to a contractor for £10,000 + £2,000 VAT. The contractor is not an end-user, and this is a CIS service so that the new rules will apply. From 1st March 2021, only £10,000 would be invoiced to the contractor, with the contractor accounting for both his input tax (£2,000) and the crane hire company’s output tax (£2,000). The main downside that has been identified in the industry is that suppliers will often have used the VAT received on payments as short term financing for working capital. Given that where a mixed supply includes a reversed charged element, the whole supply will be reverse charged, and the impact on businesses could be significant. Where the service is reverse charged, the supplier must raise an invoice as usual, but must indicate on the face of the invoice that the supply is reverse charged. That will involve including one of these statements: a. Reverse charge: VAT Act 1994 section 55A applies; or, b. Reverse charge: section 55A VATA 94 applies; or, c. Reverse charge: customer to pay VAT to HMRC. In these circumstances the supplier will put no Output Tax in box 1 of their VAT return but record the value of the sale in box 6. Continued over: Data Protection Fee We have been advised that the Information Commissioner’s Office (ICO) is in the process of writing to companies in the construction plant sector to remind organisations of their legal responsibility to pay a data protection fee. Reverse ( Inverse ) VAT in the Construction Industry