Latest legislative updates
Kurt Janson, Director of the Tourism Alliance, gives a monthly update on the latest regulatory changes affecting the hospitality industry.
Last updated 7th February 2017
Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in the Pink Book of Legislation, we regret that we cannot be responsible for any errors. This guide is not intended to be a definitive statement of the law in England. If you require precise or detailed information on the legislation mentioned in this guide, or on the legal implications for you in particular, you should consult a professional legal adviser.
At a glance:
Making Tax Digital: Update
The Government responds to consultations on initiative to digitise the tax system.
Business Rates Revaluation
- Businesses under the £12,000 threshold will be exempt from business rates and new proposals are in place for the appeals process.
- From 1 April 2017 businesses will be obliged to ensure they have purchased alcohol for sale from a registered seller.
Making Tax Digital: Update
Making Tax Digital is a major HMRC initiative to overhaul to the tax system, through the introduction of digital record keeping and obtaining quarterly updates from the majority of businesses.
The initiative is currently being trialed and is due to be phased in nationally from 1 April 2018. The Government estimates it will increase HMRC’s tax take by £8bn, through significantly reducing taxpayer error.
Free software for small businesses
To achieve this the Government is working with private software companies to develop free software for businesses with the most straightforward affairs – i.e., businesses that are unincorporated, under the VAT threshold, and have no employees.
After consultation, HMRC has proposed that this free software should, at a minimum, allow businesses to keep digital records, generate and send quarterly updates to HMRC and complete end of year returns. It will also have arithmetical error correction, some basic level of built-in prompts and help functions and be able to send information to businesses about their tax liability.
HMRC considers that businesses over the VAT threshold (currently £83,000) already have an obligation to provide quarterly tax information through their VAT returns and are therefore likely to already using a type of similar software. As such, they will need to purchase a commercial product that provides the greater functionality.
There are some exemptions to the new Making Tax Digital proposals.
As a result of recent consultations, HMRC is proposing that unincorporated businesses with a turnover of less than £10,000 will be exempt from the new obligations. Implementation is also going to be deferred for some unincorporated business that operate above this threshold and further work is being conducted to define the appropriate income threshold for exemption.
Businesses located in areas with insufficient broadband access will also be exempt (although it is proposed that these businesses will be able to compel internet suppliers to provide access).
Finally, HMRC has agreed that those who genuinely cannot use digital tools will not be forced to do so. However, they are developing a range of support measures to help people with the transition to digital record keeping (this might be financial support, extra tax relief or practical help such as online training sessions), so the level of proof required to support a case that you genuinely cannot use digital tools will probably be very high.
As such, the number of accommodation businesses that will be exempt is likely to be low. Therefore, it is important that you are aware of this initiative and prepare to undertake online book-keeping for your businesses.
Business Rates Revaluation
The Valuation Office’s recent Business Rates Revaluation has affected many accommodation businesses. The Government has removed a loophole in Rural Rate Relief so that all qualifying small businesses with a rateable value of under £12,000 will be totally exempt from business rates from next April. Gradual tapered relief will also be applied to businesses valued up to £15,000. However, it is worth noting that to qualify for this, you must normally only occupy one property in England.
For businesses that are above the threshold, there have been reports of businesses receiving revaluation increases of well over 100%. One survey undertaken by a self-catering collective found that their members had received average revaluation increases of around 60%.
There are also new proposals regarding the appeals process, with draft regulations for the new business rates appeal regime known as ‘Check, Challenge, Appeal’.
There are two main proposals that are being considered. The first is to charge businesses £300 to make an appeal, with this money being refunded if the appeal is successful. The second proposal is known as the ‘reasonable professional judgement’ provision, meaning that businesses won’t be able to argue against their rates bill if the margin of error was less than 15%.
For more information, visit the Gov.uk website.
The new Alcohol Wholesaler Registration Scheme
In response to the growing problem of counterfeit alcohol, the Government is in the process of introducing a new Alcohol Wholesaler Registration Scheme. The first stage has now been completed, and all wholesale sellers of alcohol were required to register with HMRC by 31 March 2016. These wholesalers will have received a Unique Reference Number (URN) as proof that they are legally able to sell alcohol to businesses.
Following the new rules
The second stage starts on 1 April 2017. From this date it will be illegal for you to buy alcohol from a wholesaler who is not registered and able to provide you with their URN (which you will be able to check online). Buy your alcohol from an unregistered business, and you may be liable to a criminal or civil penalty and your alcohol may be seized.
This two-stage process results in an unusual situation: between now and 1 April 2017, wholesalers can be penalised for selling you alcohol without having registered with HMRC, but it is still legal for you to buy alcohol from an unregistered wholesaler.
Also, there is one important exemption to this scheme. Retailers who make occasional trade sales of alcohol are excluded, meaning that if you buy your alcohol from a supermarket or off -licence, then they will not be registered and you don’t have to check.