VAT & Anti-Money Laundering Changes to Discuss at Interview
When you interview for accountancy jobs in the real estate and built environment, it pays to show that you stay up to date with relevant news. An informed candidate is a stronger candidate.
Of course, as specialist recruiters in the sector we spend a fair part of each day reading and analysing accountancy and property news. This insight helps us develop a deep understanding of the accountancy jobs market, and where it may be heading in the future.
In this article, we bring you the latest VAT and anti-money laundering news that affects the UK property sector and accountants. We also provide links to the full stories, so you can read the original articles.
HMRC is Cracking Down on Property VAT Fraud
As an accounting professional you'll be all too aware that from October 1st 2019, the way VAT is charged is changing. HMRC wants to tackle the amount of ‘missing trader fraud’ that is taking place. Under existing rules, VAT is charged on invoices from one contractor to another.
Under the new rules, instead of paying the VAT to the supplier (for the supplier to pay the VAT), the receiving party will be required to pay the VAT through its own VAT return. This ‘domestic reverse charge’ will apply to business-to-business suppliers of specified services, where both businesses are VAT registered. There is likely to be a substantial impact on the industry. For example:
Property accountants must be ready for this change. The cash flow issues this could cause are going to be a nightmare for many law-abiding constructions businesses. (Read more)
HMRC Cracks Down on VAT Fraud by Collecting £1
HMRC estimates that missing trader fraud costs around £100 million each year. Around £1 million of this disappeared through a VAT scam operated by father and son Brian and Jamie Colwell over a six-year period.
They claimed back the VAT on zero-rated new properties that they never built. Then they absconded to Spain. They have now been apprehended and found guilty in court. Brian Colwell was given a prison sentence of two years and eight months. His son was sentenced to five years and three months. Oh, and they were ordered to repay £1.
London Property is a Money Laundering Horror Show
Trillions of pounds are suspected to be in the washing machine of UK property. Unsurprisingly, the government has made money laundering through property a major target, promising ‘swift action’ against perpetrators. However, law firm Fieldfisher has discovered that reality does not quite live up to this promise.
During the last six years, only 55 investigations have been made against estate agents for breaches of anti-money laundering regulations in the UK. Overseas investors can set up a company to buy property in the UK with money from countries such as China, Russia and Saudi Arabia, with what appears near impunity. Dirty money is cleaned by either selling the property on or taking rental income.
HMRC contends that as well as criminal investigations, it carries out interventions – more than 5,000 in the last three years. This has resulted in a doubling of the value of penalties levied in the last two years to £2.3 million.
Last month, a report published by the UK’s parliamentary Treasury Committee recommended that the anti-money laundering system should be reviewed and that HMRC should have a greater role, becoming the regulator. (Read more)
HMRC Cracks Down by Hiking Fees 250%
It appears that HMRC has taken the Treasury Committee’s recommendation on board. At the beginning of April, estate agents received an email about fees charged to them. This email explained that ‘significant changes’ are being introduced in the anti-money laundering battle. These include:
- More staff to carry out compliance activities
- More interventions
- Providing educational products and activity, including online learning
To pay for these changes, HMRC is increasing the annual anti-money laundering fee from £130 per office to £300. If turnover is less than £5,000, the estate agent can apply for a reduction in the fee to £180. Anti-money laundering fees for all other businesses, including accountants, are increasing, too.
Tax Advice - Anti-Money Laundering Framework
Amendments to EU anti-money laundering law are set to come into force by 10th January 2020. For the first time, accountants who provide tax advice will be brought into the framework. If, as an accountant, you provide any material aid or advice on tax to a third party either as a principal business or in a professional activity, you’re obliged to comply with the new law. (Read more)
The best candidates for accountancy jobs stay up to date with accountancy news. To stay up to date with the best accountancy jobs in the real estate and built environment, contact our specialist Core Services, Accountancy and Finance Recruitment Team.