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Plastic Packaging Tax Looming!
From April 2022, the UK government are introducing the Plastic Packaging Tax (PPT). The tax will affect many of us, as it will affect plastic manufacturers, anyone involved in supply chains, as well as consumers and sellers. The hope is that the tax will encourage the use of more recycled plastic in packaging. Assuming you are a business owner or fit one of the aforementioned categories, this article will give you all the information you need to prepare for the introduction of the Plastic Packaging Tax.
What Is The Plastic Packaging Tax?
The tax will apply to all plastic packaging in the UK that has either been manufactured or imported to Britain that does not contain at least 30% recycled plastic. If you are unsure as to what is classed as ‘plastic packaging’, this is any packing that is made up predominantly of plastic (by weight). Packaging imported to the UK will be liable for the tax, regardless of whether it is being used to transport products or not.
As stated in the introduction, this will apply to many different people. However, due to the disproportionate amount of administrative burden that will be inflicted, there will be exemptions for manufacturers and importers of less than 10 tonnes of plastic packaging each year. You can find the full legislative draft on the GOV website.
What Impact Will PPT Have?
Socially, it is hoped that the tax will encourage businesses to use more recycled plastic and will thus make many industries better for the environment. If the tax is successful, it is hoped that businesses will use less plastic packages and that consumers will choose products that use less plastic packaging (as it is assumed that products that use plastic packaging will be more expensive). This being said, the government is hoping that not too much of a burden is placed on consumers, since packaging is usually only responsible for a fraction of the overall price of a product.
It is expected, though, that the tax will affect around 20,000 manufacturers and importers. As well as one-off costs associated with familiarization of the new rules, businesses will also face the costs of filing and amending their VAT returns. There may also be costs associated with amending supply chains.
How To Register For PPT
A point of interest for businesses is that they will have to register for PPT if they handle plastic packaging, regardless of whether they meet the 30% recycled content threshold. This obviously means that businesses must be aware of their compliance obligations, and must prepare their business, way in advance of April 2022.
If your business would be liable, you will have to register in April 2022. In order to register, you will need to provide a lot of information, including your business type and address, and an estimate of how much plastic packaging you will be likely to use. Once registered, you will be issued a reference number and information that you receive from HMRC.
We Are Here To Help
Should you require any assistance with the Plastic Packaging Tax, don’t forget that our long history of working with ecommerce sellers, especially those who use Amazon and eBay, means we offer expert advice when it comes to your processes.
Please do not hesitate to send us an e-mail at enquiries@jpaccountant.com or contact us through social media to receive a quote today for our support with all your tax needs or logistic support. In addition to our logistic and ecommerce services, we would be more than happy to help you register for UK & EU VAT and file your UK & EU VAT returns, and help you comply with VAT in case your account faces any issues.
Businesses Very Concerned About Making Tax Digital
If you are a business owner, you will undoubtedly be aware of the Making Tax Digital (MTD) initiative that has been launched by the UK government. The aim of this scheme was to make all VAT reporting digitalized by the end of 2020. Of course, businesses were happy to hear that this deadline was extended due to the pandemic. However, the deadline is now looming once again as businesses with a turnover between £10,000 and £85,000 will have to be MTD compliant by April 2022. Despite the long notice, surveys are showing that there are still thousands of UK businesses who do not feel ready to implement MTD software in the new year. In light of these survey results, we thought now was a good time to revisit MTD so you can make sure you are prepared by April of next year.
What Do The Survey Results Tell Us About MTD?
Almost 300,000 UK SMEs have claimed that they are not ready for Making Tax Digital to be imposed on them in April 2022. The changes will require these businesses to implement a new software for collecting and reporting their taxable sales. Whilst bigger businesses have been required to this for some time now, April 2022 will see almost all UK businesses be required to implement the software. This will affect 1.1 million SMEs.
However, it is unclear whether small business owners will actually be more stressed by MTD. Whilst the implementation of the software will be stressful, as will the training of staff to use the software, the systems may actually help to reduce stress in the long run. Almost 60% of businesses surveyed agreed that digital tax reporting could reduce stress when filing tax returns. Indeed, the new systems will certainly make reporting VAT quicker and more efficient.
Does This Mean That MTD Will Actually Be Beneficial For SMEs?
Some experts certainly think so. MTD will mean that business owners will have to incorporate cloud-based services into their reporting systems. Whilst this could be slightly costly and complicated, industry experts are arguing that these systems can improve organizational health. These systems will certainly lead to quicker management information. This improvement in the speed in which business owners will be able to access their financial reports will hopefully mean that business can streamline their processes more efficiently. This may also mean that business owners will need to stress less about VAT reporting.
The only issue seems to be that business don’t feel prepared enough. There will undoubtedly be an integration period that may not be completely smooth, and these companies will have to train staff – which will be difficult if they themselves don’t feel completely confident about the new regulations. In addition to this, businesses have many questions, such as what software can they use, and what are the penalties for failure to comply? This information will have to be readily available before businesses can feel completely comfortable with MTD.
Are Any Businesses Likely To Be Exempt?
There are some very specific cases in which you could be exempt from MTD. These factors include your age or disability, your religious beliefs, or any other reason that implementing the software would be considered unreasonable or impractical, such as where your company is based.
However, you will need to apply to HMRC in order to gain an exemption. You cannot just presume that you are exempt. To do this, you will need your identification details (such as your VAT registration number) and you will also need to provide details on how you currently file your returns. More information on exemptions and the application process can be found on the gov website.
SMEs Need To Get Started With MTD By April 2022
It is recommended that you employ an accountancy service to ensure you are VAT compliant. With an accountancy firm, you can even still comply with the new MTD rules by sending your spreadsheets to them and let them handle the issues posed by making your tax digital, without the need to use the software.
That’s where we come in.
J&P is a registered accounting firm in the UK. We have the qualifications and strength to help you plan ahead, so please do not hesitate to get in touch should you have any further questions about this policy, or if you need any help with submitting your VAT returns. You can contact us at enquiries@jpaccountant.com, on our social media, or give us a call on 0161 637 1080.
Hospitality Sector Fearful As Omicron Looms
As with the first surge in the coronavirus, it looks as though the hospitality sector maybe the industry with the most to lose this festive season. As fears over the Omicron variant rise, party-goers and those attending meals have flocked to cancel their Christmas party bookings. This has prompted the hospitality industry to plead for further support from the UK Government. In response, Rishi Sunak has scheduled crisis talks with business leaders. The question is – does the hospitality sector need more support?
Why Is There Such Concern For The Hospitality Industry?
Unless you have been living under a rock, you will no doubt have been following the mass fear that has come as a result of the proliferation of the Omicron variant. As people are worried about having to isolate over Christmas and New Year, the public are in the process of cancelling non-essential plans in the hopes of protecting their time with their families.
This is a massive blow for the hospitality sector, as naturally a lot of the plans that are being cancelled are those that would take place in establishments that fall under the umbrella of hospitality. The British Beer and Pub Association are estimating that pubs will sell 37 million less pints over Christmas than was originally expected. This would result in losses of up to £297 million.
Coronavirus Support That Is Currently Available To The Hospitality Sector
Whilst the Chancellor has expressed great concern and sympathy for the hospitality sector at this time, his initial stance has been to point to existing support, rather than immediately offering more. In fairness to him, there is already substantial support being given to the hospitality sector.
Currently, the hospitality sector are enjoying a VAT reduction of 12.5%, down from their usual 20%, which is currently scheduled to last until the Spring. In addition, the UK government have given local authorities £250 million in grants to be used to support local businesses. He has said that is primary concern is getting this money to struggling businesses as quickly as possible.
What Further Support Are The Hospitality Industry Asking For?
Despite the current support, industry leader in hospitality are still deeply concerned about the impact the virus may have on sales in December. They argue that they suffered greatly last year, considering that the festive season can represent over a quarter of all yearly takings for some establishments, and that they will not survive another barren Christmas period.
Thus, there are calls from those within the industry to keep the VAT rate of 12.5% for longer than just Spring, and some are even suggesting that VAT rates should be reduced further. Other suggestions have been the suspension of business rates for hospitality businesses for the first quarter of 2022, and the reinstatement of recovery grant.
Conclusion – The Pandemic Is Still Taking Its Toll On The Hospitality Sector
As you can see, there is still some way for the hospitality sector to go before it has completely recovered from the pandemic. Hopefully, the government will announce some further support in the coming weeks, or at the very least an extension to the current support.
Is your business struggling with the implications of the pandemic? Why not contact us so we can help?
At J&P, helping small businesses is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and to keep you up to date with all the latest Government guidance and support, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail toenquiries@jpaccountant.com to receive help managing your business through the end of lockdown.
New Amazon VAT Service Update Alert!
Amazon have updated their VAT service for 2022. Previously, sellers could sign up for the service and not be charged for the first 6 months. However, sellers who sign up for the service from the 1st of January 2022 will now have to pay fees from the first month of joining. This is likely a reaction to the struggles that marketplaces are experiencing with complying with the tax rules that came into force last summer. In today’s article we’re going to take a look at the tax rules surrounding online marketplaces and how you can ensure that you comply with all of them.
The EU Tax Rules For Online Marketplaces
It had been clear for a long time that the rules regarding VAT and ecommerce had been outdated. That is why last summer the EU introduced a new set of tax reforms regarding the collection and calculation of VAT on ecommerce transactions. For online marketplaces, this meant that they were given much more responsibility when it comes to VAT reporting. In many cases, it is now the responsibility of the online marketplace to record and declare the VAT on sales made on their platform.
This change placed a lot more strain on online marketplaces. If they fail to record and report the VAT of the sales made on their platform correctly they are in danger of receiving fines. This is why we are seeing the introduction of services such as the Amazon VAT service. These services will make it easier for marketplaces to accurately report the VAT that is now their responsibility to declare. This is especially difficult when one considers the varying nature of VAT rates across the EU.
The Amazon VAT Service
The Amazon VAT service essentially allows sellers to manage their VAT requirements in one place. Via a third-party service provider, sellers are able to complete all their VAT registration and filing obligations. This service can be used in seven countries; UK, France, Germany, Italy, Spain, Czech Republic and Poland.
The service will cost €33 per month, per country that you are registered in without fiscal representation. If you sign up before the new year, Amazon will cover the cost of the first six months. However, from the new year this will no longer be the case and sellers will need to begin paying from the month that they sign up. It is worth knowing that you can also transfer any existing VAT responsibilities that you may have over to the service to let Amazon and the third-party service provider deal with them. Find out more about to get started with the service here.
What About Other Online Marketplaces?
This strain doesn’t just apply to Amazon. All online marketplaces have felt the stress of complying with the VAT rules for ecommerce. Etsy have announced to their sellers that they must comply with their new regulations or risk having their accounts frozen. These regulations include updating their taxpayer ID and their addresses.
Etsy have informed sellers that this is due to new regulations that state that Etsy must report payments over $600 on behalf of sellers from the beginning of 2022. Currently, this figure is $20,000, so obviously this means that Etsy are about to feel the burden of much more administrative costs. This is why services such as the Amazon VAT service are so invaluable.
We Can Act As A Third-Party Service Provider For The Amazon VAT Service
As usual, we would like to take this opportunity to remind you that our long history of working with Amazon and eBay sellers means we can offer you expert advice. As a trusted member of the Amazon Service Network, we can act as a third-party service provider for the Amazon VAT service.
As well as helping with your Fulfilment, we would be more than happy to help you register for the OSS and help you with all your VAT compliance needs in case your account faces any issues. So please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com for a quote today.
Ecommerce for Christmas Soars As Black Friday Dips
You may be surprised to know that Black Friday sales actually saw a decrease from 2020 by about 14%. This was likely to do with supply chain issues and the inevitable drop in ecommerce from peak pandemic levels. However, this drop off is not indicative of the festive shopping season as a whole. Indeed, it is expected that more people will actually complete their Christmas shopping online than ever before. Here’s our opinion on why and our choices for trends that ecommerce sellers should be preparing for over this festive season.
Ecommerce Will Still Flourish This Christmas
It is being estimated that European ecommerce revenues will surpass 396 billion euros by the end of 2021. This shows just how popular shopping online has become since the pandemic. Undoubtedly, this will continue with many surveys suggesting that shoppers will carry out the majority of their Christmas shopping online this festive period.
Sellers should be aware of this and prepare their delivery options accordingly. Couriers will be under immense stress over the coming weeks so it is worth suggesting to your customers to get their orders in early. Many retailers are advertising their delivery ‘cut-off’ points, essentially informing their potential consumers of the latest that they can make a purchase and receive it before Christmas day. This is a wise strategy for sole traders to imitate.
Online Marketplaces Set To Dominate This Christmas
Online marketplaces have become the first port of call for online shoppers. Recent research has shown that the majority of consumers now use online marketplaces as a search and comparison tool when they’re looking for a product. Online marketplaces in Europe are thought to have enjoyed revenues totalling somewhere between 120-150 billion euros in 2021. This means they fall just shy of being responsible for half of all the European ecommerce market sales.
Sellers should be aware that the popularity of each marketplace differs by country. As you might expect, Amazon is the dominant platform in most countries. However, Allegro is the dominant force in Poland and Bol.com is the preferred platform for most Dutch consumers. Evidently, consumers tend to prefer to use their domestic platforms. Sellers should keep this in mind when trying to sell over Christmas and into the new year. If a lot of your customer base is abroad, perhaps you should look into setting yourself up on their domestic online marketplace. This would obviously require VAT registration, but that’s where we come in…
If You Are An Ecommerce Seller, We Can Help You
If you have any concerns about dealing with the upcoming holiday season, we at J&P have the qualifications and knowledge to help you plan ahead, so please do not hesitate to get in touch should you have any further questions about selling on online, or if you need any help with adapting your business.
We can get you VAT registered across the EU and can file your returns. Essentially, we sort out your tax so you can deal with selling your products. You can contact us at enquiries@jpaccountant.com, on our social media, or give us a call on 0161 637 1080. Finally, we would just like to wish you a merry Christmas from all of us here at J&P!
Panic As EU VAT Gap Widens After Pandemic
Before the pandemic, the EU VAT gap was beginning to shrink as member states improved their collection processes. New reporting techniques such as e-invoicing meant that member states were on the right track to reducing the tax gap. However, the pandemic saw consumption decline and GDP growth slow, and thus the EU VAT gap widened once again. Today we’re going to take a closer look at the figures, and what steps we can expect to see the member states take to try and combat this trend.
EU VAT Gap Widened
Currently, experts are predicting that the EU VAT gap will equate to more than €164 billion by the end of the year. This would mean that the EU has roughly lost €4,000 a second. This would represent a considerable jump from 2019, where EU countries are thought to have lost roughly €134 billion in lost tax revenue. This was a decrease of €7 billion from 2018.
Another way that we have seen countries lose money is from tax fraud. Many dubious opportunists attempted to con tax authorities during the pandemic by wrongly applying for the aid offered by governments during the pandemic. At the time of writing, governments from all over the world are investigating these individuals in an attempt to recoup some of their lost money, and to reduce the EU VAT gap.
What Measures Are We Likely To See Introduced To Combat The EU VAT Gap?
As mentioned in the previous section, governments are likely to step up their attempts to find misplaced taxpayers’ money from the pandemic. In addition, we will certainly see an increase in tax investigations. This will likely affect ecommerce sellers. Since ecommerce is still a relatively new marketplace, tax authorities are yet to work out how to adequately collect tax from this industry.
Furthermore, the EU VAT gap is likely to benefit from the introduction of environmental taxes. Globally, we are about to see a huge increase in environmental taxes as governments seek ways to force companies to lower their carbon footprint. This will represent quite a difficult task for MNEs as there are very few tax professionals who specialize in this area. Should you and your business require any support with environmental taxes such as plastic taxes or carbon taxes, we can help. Contact us today for a free consultation regarding the tax services we can offer to help you and your business.
If You Are An Ecommerce Seller, We Can Provide You With Solutions
This an exciting time to be an ecommerce seller, but at the same time these constant rule changes can be distressing and confusing. Luckily, we are here to support you through the EU VAT gap. Whether it is expanding your business to another country or you just need supply chain support, we at J&P Accountants have been supporting ecommerce sellers for years and can offer you a range of services.
If you are a business who participates in cross border ecommerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
