Chancellor Philip Hammond has invited small businesses to provide feedback on the impact of the current VAT threshold on their firm.
In November 2017, the Office of Tax Simplification (OTS) outlined a range of measures intended to help simplify the VAT system. The OTS suggested examining the current approach to the level and design of the VAT registration threshold, and argued that the current registration threshold of £85,000 is ‘costly’, and has a ‘distortionary impact’ on business growth and activity.
The government has acknowledged that the current design of the VAT registration threshold could be ‘disincentivising’ small businesses from expanding their firm. The consultation will explore the effects of the VAT threshold on small businesses and examine different policy options.
Businesses can contribute their views online at www.surveymonkey.co.uk/r/W7TLCZ7. The deadline for firms to respond is 5 June 2018.
Meanwhile, the government recently introduced new rules to combat online VAT fraud. The measures, which were first announced by Mr Hammond during the 2017 Autumn Budget, strengthen the powers to make online marketplaces accountable for VAT fraud perpetrated by sellers using their platforms.
Under the government’s new guidelines, online marketplaces will be liable for any unpaid tax if they do not remove sellers who fail to pay VAT from their sites. The regulations apply to both UK sellers and those based overseas.
Marketplaces are also now required to ensure that sellers using their platforms display a valid VAT number.