The world of taxation never stands still - and our aim in these pages is to keep you up to date with the very latest changes to UK tax and customs legislation, with particular reference to Value Added Tax.

We are very pleased and proud to announce that we have been awarded by the Association of Chartered Certified Accountants the ACCA Quality Checked mark. This mark is only awarded to firms that meet the Institute's standards of excellence.

The standards set by the Institute go beyond statutory and regulatory compliance and include adhering to ACCA's Code of Ethics and Conduct. In addition, firms must clearly identify all their client's needs, re-assess services for continuing clients on a regular basis; maintain efficient paper-based records and electronic systems, and keep partners' and staff skills up to date. They must communicate effectively with statutory bodies, ACCA and other regulators, and importantly, keep clients informed of opportunities or obligations of which they may have been unaware.

The ACCA Quality Checked mark confirms that Lysi has achieved and maintained a standard of excellence that enables us to offer the best available service to our clients.

HMRC has confirmed that from From 1 April 2012, all VAT-registered businesses will have to send their VAT returns online and pay their VAT electronically.

There have been changes to the penalties for the late filing of self assessment tax returns from tax year 2010-11 onwards.

Individuals who miss the self assessment filing deadline this year will be immediately liable for an automatic £100 late filing penalty. This penalty will apply even if they don’t have any tax to pay or they pay their tax in full by 31 January 2012.

These new penalties apply to all self assessment tax returns for tax years from 2010-11 onwards. The fixed £100 penalty for failing to file a tax return on or before the filing date will therefore apply to:

•paper returns received on or after 1 November 2011

•online returns received on or after 1 February 2012.

Daily penalties of £10 per day will also take effect if the tax return is still outstanding three months after the filing date. So if they file a paper return after 31 October 2011, they will be liable to a daily penalty starting on 1 February 2012 – that’s three months earlier than online filers; all the more reason to file tax returns online.

And remember if a partnership tax return is late each partner is liable to the automatic £100 penalty and to any £10 daily penalties chargeable.

HMRC has changed its position on input tax on entertaining expenses.

HMRC has recently changed its position relating to input tax on entertaining expenses following a case in the European Court of Justice.

Input tax on business entertaining has never been claimable since VAT was first introduced in the UK, and it has been some years since recovery of input tax on entertaining an overseas customer was also blocked.

However, following the Danfoss and Astra Zeneca case, HMRC has concluded that the UK’s block on the recovery of input tax on the business entertainment of overseas clients is inconsistent with EU law.

The block on claiming input tax on entertaining UK customers (and overseas contacts who are not customers) remains in place. But going forward, businesses can now claim the input tax incurred when entertaining overseas customers. Subject to the normal four year limit, HMRC will also now allow claims for previously restricted input tax on entertainment of overseas customers.

The VAT notice 700/65 was amended in November to reflect this change.

HMRC Brief 44/10 details this and also sets out three scenarios to help businesses to ascertain whether the input tax on entertainment costs is claimable:

1) Meetings in the office: HMRC considers that when an overseas customer is entertained in a staff canteen or similar to facilitate a business meeting, the input tax on such entertaining will be recoverable. HMRC takes the view that any private benefit derived by the overseas customer is accessory to the needs of the business

2) External meetings or events: where meetings cannot be held in house due to lack of space or facilities, the same general principle will apply as for meetings in the office, and the input tax will be recoverable. This will apply only to the basic provision of refreshments and food. If the expenditure goes beyond that, there should be a private use charge, or, alternatively, no claiming of the input tax

3) Corporate hospitality events: businesses sometimes offer customers or potential customers general hospitality, such as golf days and the like. HMRC will not allow the input tax deduction as such events are unlikely to have a strict business purpose.

Businesses are reminded that the threshold below which they have the option of filing quarterly EC Sales Lists (ESLs) for intra-Community supplies of goods will be reduced from £70,000 to £35,000 with effect from 1 January 2012.