By Ashley Preen
May 21, 2020
The UK government has announced a temporary VAT zero-rating for all Personal Protective Equipment (PPE).
VAT zero-rating means that the items sold are still subject to VAT, but that the VAT rate is zero per cent.
If you sell PPE, your VAT invoice would now look something like this (please note that these are invented prices):
5 x FFP3 respirators — £39.99
VAT 0% — £0.00
Total: £39.99
You still need to issue a VAT invoice for the purchase as with any other VAT-applicable transaction.
The zero-rating went into effect on 1 May and will stay in place until 31 July (or the end of the first VAT quarter for stagger group 2).
The reason for this zero rate is to alleviate the burden of VAT for such protective equipment from people and companies that are not able to reclaim their VAT.
If you are an online store selling these goods, you will need to update your product inventory to set the VAT to zero per cent.
Please note that you must not set the inventory item to “VAT Exempt” or “Out of Scope”, but rather set the VAT percentage to zero.
The zero-rate only applies to PPE which follows “Public Health England’s coronavirus (COVID-19) PPE guidance on 24 April 2020″.
Items listed in that article include:
Rishi Sunak has not had an easy time of it since being appointed Chancellor of the Exchequer on 13 February 2020, barely a month before the UK’s lockdown went into effect.
Since then he has put into effect unprecedented schemes and programs in an effort to keep the UK economy from collapsing, and to assist businesses and individuals.
On 20 March he announced the Coronavirus Job Retention Scheme which would pay up to 80 per cent of employees’ wages if they were put on furlough, up to a maximum of £2,500.
He deferred VAT payments for the next quarter until the end of the year.
He ensured that the Coronavirus Business Interruption Loan Scheme would be interest-free for a year.
When that same Coronavirus Business Interruption Loan Scheme (CBILS) came under fire for low loan-approval rates, he put into place the Bounce Back Loan Scheme (BBLS). The BBLS saw upwards of 100,000 small businesses applying for it on the very first day.
This latest effort of his is aimed at easing the pressure and costs, however small, for those on the frontlines defending the United Kingdom against the virus.
Rishi Sunak announced in his March Budget that e-publications would be zero-rated as of 1 December.
But on 30 April 2020, he said,
“We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives.
“That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers.”
So, this e-publication zero-rating is now already in effect. If your company sells any e-publications, you need to update your inventory items as above.
The FTSE climbed by 4.3 per cent on Monday, 18 May. Germany reported a recession, but “Frankfurt and Paris bounced by more than 5%” and crude oil is surging as well.
There is hope on the horizon as investors grow confident that the virus is finally getting under control.
As a business owner, it is difficult to understand if all the actions and decisions taken by governments worldwide were entirely correct. But there is no doubt that things are getting better now, and this matter of PPE being zero-rated is welcome news for those helping sincerely to keep this pandemic under control on our home soil.
We're glad our customers are happy with our products and services. Here's what some of them said about us...
Pearl Accountants are unique as you can get. They have a great one to one service and they always answer your queries in a fast and professional manner.
I find Pearl when I opened up my limited company. I was clueless, but Pearl Accountants kindly assisted me in the best way so I felt at ease and understood how the operation works.
Everything was explained clearly in detail and I could ask as many questions as I wanted. They were never rude or impatient, just happy to be there to help.
The client had previously missed a few deadlines with HMRC and Companies House and needed a hands on approach
Wanted to ensure they have a proactive team so that no deadlines were missed and full end to end bookkeeping carried out
Client was introduced to a dedicated accountant who filed all outstanding accounts and appealed for any penalties by HMRC
After being in business for years, I must admit that Pearl Accountants are far the best accountants I have worked with. They are helpful, friendly and trust worthy and most of all provide excellent tax advice.
They provide high-level client care. I would certainly recommend Pearl Accountants to all.
Invoice factoring complications led client to inaccurate bookkeeping and unclear of clear reporting requirements
Processing the invoicing system accurately with clear and transparent management reporting was key
Processing the invoicing system accurately with clear and transparent management reporting was key
Pearl Accountants have been my accountants for many years and have been a great asset to my businesses. They have a strong team and knowledge is second to none. Very happy with the service and professionalism from them. Will continue to recommend them to my network.
Paying huge taxes without any tax efficiency and lack of understanding on various VAT aspects.
Minimise tax bills and ensure the business was compliant with HMRC and Companies House
As a startup graphic design company, we ensured the client used tax allowances and efficient payroll structures to withdraw money
Holborn based laser hair removal company joined us with a view to expanding their business on a large scale. They undertook accounting and advisory services which helped them grow above their rivals.
Holborn based laser hair removal company joined us with a view to expanding their business on a large scale. They undertook accounting and advisory services which helped them grow above their rivals.
Achieve a national presence and grow organically through current business model
We came on board and advised client on tailor made business strategies to achieve their online and brick and mortar presence.
We have been using Pearl Accountants for over 10 years and developed a very good business relationship. Very clear instructions with easy to follow accountancy system in place. Great expertise in tax efficiency, as well as business, grow and development services. One of the best-chartered accountants in town.
We have already recommended your services and will share our good experience with others in future.
It is always someone available on the phone but if not available at the time your accountant will always call you back.
Complete peace of mind with prompt and clear communication so no deadline missed.
Very satisfied.
Client was growing very fast with inability to keep track of growth with no cloud accounting setup and no integrations
Time saving on bookkeeping and clear vision of profitability management reports. Setup with cloud integrations.
Recommended a online cloud solution with time saving applications and clear breakdown of monthly profitability.
We recently migrated to Pearl Accountants from large national accounting firm. Transfer was easy and faultless. Friendly staff at Pearl lead us through the process with ease. Initially we were drawn to their service because of their attractive pricing structure. However it quickly became apparent to us that we were getting a lot more for our money than we initially thought as they are happy to stretch the engagement to all sorts of additional advice. Thumbs up to Pearl Accountants.
No clear strategy for business growth or tax planning reduction techniques
To achieve business advisory, tax planning and accurate reporting requirements
Recommended a online cloud solution with time saving applications and clear breakdown of monthly profitability.
Our client, a well established practising solicitor in the UK required a headache free service to ensure their accounting requirements were met and cloud accounting solution setup
Too much time was being consumed in bookkeeping and previous accountants missed various deadlines
More time was needed to focus on the business and ensure a firm came on board to take full ownership.
Advised client to forward us everything in ‘shoe box’ style and provided full breakdown regularly to keep informed.
They make me feel that I am a valued customer and to me what makes Pearl accountants unique is their helpful team of dedicated staff members. Their response is always prompt and it makes the daunting task of accounting really easy for me. Pearl Accountants is really a five-star accountant company.
As a franchisee tuition business, the client did not have the right advise to reduce taxes or a proactive accountant to advise where needed
Reduction in taxes through governmental tax subsidiaries and requiring more time to focus on the business.
A dedicated accountant was assigned to ensure deadlines were not missed and review of tax strategies.
Our client was in need of a specialist contractor accountant to remain compliant and ensure they did not fall in IR35.
Client required advisory on payroll and VAT solutions and filing of accounts at year end.
No clear direction on IR35 nor guidance on allowable expenses that could be claimed.
Ensure the contractor company was compliant with HMRC and Companies House and advisory on saving taxes.
Provided a full explanation and review on IR35 and guidance provided on which expenses could be claimed to reduce taxes
Our client having a property portfolio in Switzerland required a specialist accountant that understood the UK tax legislation whilst having a thorough understanding of overseas tax implications.
Overseas and UK income not declared, needed tax returns filed for previous years and appeal to HMRC for outstanding penalty
Paying taxes in the UK and overseas, wanted help understanding the tax system so avoid paying taxes twice.
Appealed successfully for prior years penalties and filed all outstanding returns. Thorough review of all tax allowances available.
Our client joined us after losing track of their finances and needed someone they could turn to for help. We came on board and reviewed their internal bookkeeping arrangements and recommended efficiency to lower their input on areas which could be outsourced to us.
No real track of profitability or clear vision of expenditure along with weak internal processes.
To achieve a clear breakdown of expenditure and ensure the current setup for bookkeeping was run more efficiently.
Recommendation on reporting packs, internal processes and online applications to integrate for payment reconciliation.