{"id":8644,"date":"2021-01-30T16:09:58","date_gmt":"2021-01-30T16:09:58","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=8644"},"modified":"2026-01-29T09:50:34","modified_gmt":"2026-01-29T09:50:34","slug":"new-year-new-legislation-accountants","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/new-year-new-legislation-accountants\/","title":{"rendered":"New year, new legislation: What accountants need to know in 2021"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tNew year, new legislation: What accountants need to know in 2021\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"\"\t\t\t\tKeir Thomas-Bryant<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

Throughout 2020, there were incredible challenges for businesses, and the accountancy community that supports them.<\/p>\n\n\n\n

It’s not without reason that some have referred to accounting and payroll professionals as the true superheroes of the business world<\/a>.<\/p>\n\n\n\n

Helping businesses cope with coronavirus<\/a> (COVID-19) relief measures should be seen as part of a wider trend in which accountants have increasing numbers of client advisory touchpoints.<\/p>\n\n\n\n

Making Tax Digital for VAT arguably opened the door for this in 2019, and the forthcoming introduction of Making Tax Digital for Income Tax<\/a> in 2023 can only help cement the role of the accountant as a true business adviser and partner for their clients.<\/p>\n\n\n\n

With this in mind, below we take a look at challenges presented across 2021.<\/p>\n\n\n\n

This is largely from a tax compliance point of view, and our focus is on where accountants can once again aim to provide excellent service, or perhaps even create fresh service offerings.<\/p>\n\n\n\n

Here’s what we cover in this article:<\/p>\n\n\n\n

Brexit requirements across 2021<\/a><\/p>\n\n\n\n

Coronavirus requirements across 2021<\/a><\/p>\n\n\n\n

Making Tax Digital for VAT changes in April 2021<\/a><\/p>\n\n\n\n

Construction Industry Scheme (CIS) changes in March 2021<\/a><\/p>\n\n\n\n

IR35 (contractor) requirements in April 2021<\/a><\/p>\n\n\n\n

EU VAT e-Commerce Rules in July 2021<\/a><\/p>\n\n\n\n

Brexit requirements across 2021<\/h2>\n\n\n\n

It’s stating the obvious to say that Brexit<\/a> is where most clients directed their immediate attention when 2021 got underway.<\/p>\n\n\n\n

1 January 2021 marked the UK no longer being covered by European Union (EU) laws and regulations, following the end of the Brexit transition period.<\/p>\n\n\n\n

A substantial raft of laws and regulations came into force immediately, but many of the new requirements relating to issues such as import of goods or recruitment of EU nationals are staggered across 2021, and even into 2022.<\/p>\n\n\n\n

Which clients are affected?<\/h3>\n\n\n\n

Clients who import and\/or export are most likely to require expert help. They have immediately had to deal with new VAT requirements.<\/p>\n\n\n\n

What do clients have to do?<\/h3>\n\n\n\n

Start with our guide to post-Brexit VAT<\/a> for an in-depth examination written specifically for accountants.<\/p>\n\n\n\n

Several government schemes aim to ease the immediate administrative requirements for import\/export to the EU.<\/p>\n\n\n\n

Chief among these for clients that import are deferred customs declarations<\/a> (using simplified customs procedures), and postponed VAT accounting<\/a>.<\/p>\n\n\n\n

But there are required changes for exporters<\/a>, too.<\/p>\n\n\n\n

Postponed VAT can be used by businesses in the UK, and there’s no need to apply or notify HMRC in advance.<\/p>\n\n\n\n

However, several of the requirements for deferred customs declarations \u2013 such as the simplified customs procedures, and duty deferment account \u2013 are not automatically applied to businesses.<\/p>\n\n\n\n

They need to be applied for and authorised by HMRC, and clients may need help with this.<\/p>\n\n\n\n

Businesses in Northern Ireland can also use postponed VAT accounting. While they have no need to because of the Northern Ireland Protocol, it can be still be used for trade with countries outside the EU that aren’t the UK.<\/p>\n\n\n\n

In return for a small adjustment to how they undertake their VAT Accounting, this can deliver a cash flow benefit to those already importing from those countries.<\/p>\n\n\n\n

The government’s new Border Operating Model introduces further key import\/export requirements across the year.<\/p>\n\n\n\n

1 April 2021 sees the introduction of additional checks on Sanitary and Phytosanitary (SPS) goods, for example \u2013 see section 2.1 of the UK’s Borders Operating Model manual<\/a> for more details.<\/p>\n\n\n\n

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Download your free guide, Business after Brexit, and discover what you need to know and do from 1 January 2021<\/a><\/div>\n<\/div>\n\n\n\n

Coronavirus requirements across 2021<\/h2>\n\n\n\n

The coronavirus assistance provided by the government continues into 2021, and will probably be the second most urgent area after Brexit that your clients have been focusing on.<\/p>\n\n\n\n

Furthermore, all eyes will be on the budget announcement scheduled for 3 March 2021, in which further relief measures could be announced.<\/p>\n\n\n\n

We’ll cover these on Sage Advice at that time.<\/p>\n\n\n\n

Which clients are affected?<\/h3>\n\n\n\n

All businesses are affected by the ongoing coronavirus disruption, of course.<\/p>\n\n\n\n

But those that are continuing to use the Coronavirus Job Retention Scheme Extended (CJRS)<\/a> to furlough workers, and sole traders who use the Coronavirus Self-Employment Income Support Scheme<\/a> (SEISS), will probably choose to make further applications in 2021.<\/p>\n\n\n\n

VAT-registered clients in the hospitality and tourism areas should be made aware the reduced rate of VAT scheme<\/a> is due to end, too.<\/p>\n\n\n\n

What do clients have to do?<\/h3>\n\n\n\n

Our coronavirus financial support timeline<\/a> article provides details of what’s required across 2021 and beyond, and is a good starting point.<\/p>\n\n\n\n

But sticking to 2021, clients may need ongoing assistance to apply for the CJRS and SEISS schemes in the first half of the year \u2013 although at this stage, one might suspect these applications are becoming something of an annoying formality.<\/p>\n\n\n\n

The CJRS is now scheduled to stop covering employee furloughing as of 30 April 2021, following another extension from the chancellor in December 2020.<\/p>\n\n\n\n

It’s not yet known when the final claim date for businesses will be.<\/p>\n\n\n\n

Clients who are sole traders using SEISS should have made their first extended period claim by 29 January 2021.<\/p>\n\n\n\n

The second extended period claim needs to be made after 1 February 2021, but we don’t yet know that part of the scheme will open for applications, or when the final application date will be.<\/p>\n\n\n\n

VAT-registered hospitality clients using the reduced rate scheme will need to make adjustments to their accounting and point-of-sale (POS) systems to prepare for the end of the scheme on 31 March 2021.<\/p>\n\n\n\n

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Download your free Managing Uncertainty guide to help you create business continuity plans that keep your company moving during uncertain times<\/a><\/div>\n<\/div>\n\n\n\n

Making Tax Digital for VAT changes in April 2021<\/h2>\n\n\n\n

Although the majority of VAT-registered businesses implemented MTD for VAT<\/a> in 2019, the adaptation journey for some businesses continues into 2021.<\/p>\n\n\n\n

Additionally, voluntary VAT-registered businesses may have to make some adaptations too in 2021 \u2013 even if they haven’t yet registered for MTD for VAT.<\/p>\n\n\n\n

Which clients are affected?<\/h3>\n\n\n\n

There are two separate issues.<\/p>\n\n\n\n

The first is that the MTD for VAT ‘soft landing’ period ends<\/a> on 1 April 2021. This was the relaxation of the rules around digital linking that were intended to give businesses time to fully adapt to MTD’s requirements.<\/p>\n\n\n\n

Put simply, it means it’s no longer legal for you or your clients to cut\/copy and paste to select and move information, either within a software program or between software programs, when the data relates to their VAT record-keeping, or otherwise preparing the VAT Return (although there are slightly different rules for making input\/output adjustments).<\/p>\n\n\n\n

The second issue as of 8 April 2021 is a potential change for how your voluntary-VAT-registered clients, who aren’t registered for MTD, will have to undertake their VAT accounting.<\/p>\n\n\n\n

HMRC is turning off<\/a> a legacy, non-MTD method known as the XML channel.<\/p>\n\n\n\n

This is used by some accounting software to communicate with HMRC computers in order to file VAT Returns.<\/p>\n\n\n\n

What do clients have to do?<\/h3>\n\n\n\n

Fixing both issues is a matter of outreach to clients \u2013 education and, potentially, upselling and training in new software.<\/p>\n\n\n\n