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Changes in VAT and Customs in 2022

5 January 2022

Newsletters and Updates

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  • The temporary reduced rate of 12.5% for hospitality ends on 31 March.  The VAT rate reverts to the standard rate of 20% from 1 April.
  • For those businesses (making taxable sales below £ 85,000 a year) that are not currently submitting returns via Making Tax Digital (MTD) accounting software, they will be obliged to do so for the first return that is wholly after 1 April.  The first quarterly return that must be submitted by MTD is either 06/22 or 07/22 or 08/22 depending upon the return stagger used.
  • A new, more lenient penalty system for failure to pay and submit returns on time, replacing the existing Default Surcharge was be introduced from 1 April but has been delayed until 2023.  The new points based system applies to both VAT and Income Tax Self-Assessment.  There is no penalty if payment is received within 15 days of the due payment date of the VAT return. 
  • No requirement to submit Intrastat Supplementary Declarations for Arrivals or Despatches beyond period 12/21, unless you are trading with Northern Ireland. 
  • The VAT registration compulsory threshold will remain at £ 85,000 of taxable sales in the previous 12 months, throughout 2022.  After taking account of inflation, the threshold falls in real terms.

Customs/international trade

  • All imports from the EU require a full entry from 1 January 2022.
  • Imports from the EU are more likely to be physically checked at the UK border/Inland Border Posts by Customs/Border Force staff.  Additional documents required for imports from the EU either on 1 January or 1 July including health certificates and phytosanitary certificates.
  • More Freeports to be become operational during the year.  Eight freeports have been authorised but only one, Teesside is currently open.  The Freeport provides similar benefits to a Customs warehouse, so no customs duty, VAT or excise duty (alcohol, oils, tobacco) are due at import.  There are other direct tax benefits available in a Freeport.

For more information on this topic, or if you require any advice please get in contact with a member of the VAT and Customs Duty team