April questions and answers

Newsletter issue - April 2020.

Q. My business imports goods from the EU. What is the current position regarding postponed accounting for VAT?

A. There is now a transition period until the end of 2020 during which the UK and EU negotiate additional arrangements. The current rules on trade, travel, and business for the UK and EU will continue to apply during the transition period. In broad terms, new rules will take effect on 1 January 2021.

HMRC have confirmed that from 1 January 2021, postponed accounting for VAT will apply to all imports of goods, including from the EU. This will allow businesses to account for VAT on imports through their periodic VAT return as opposed to having to pay that VAT at the UK border.

Q. My business produces digital publications. I am aware of the decision in the recent case of News Corp UK and Ireland Ltd (UT/2018/0065), following which HMRC maintained that the zero rate of VAT only applies to the sale of printed matter (that is, supplies of goods). However, I understand that this policy has now changed. Is this true?

A. Yes. The government will apply a zero rate of VAT to e-publications, which will make it clear that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts. This will take effect from 1 December 2020.

Q. I have recently sold a buy-to-let property in the UK, which generated a capital gain. Can I off-set this gain against a rental property development in France?

A. Unfortunately not! There is no rollover/holdover relief, or deferral of capital gains tax, caused by the sale of a UK residential property, by investing in another property, regardless of whether the new property is in the UK or overseas. The only exceptions to this rule are: (a) the sale relates to a compulsory purchase order; or (b) in the case of a qualifying furnished holiday letting.

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