News added on 01.12.2017

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OTS report - VAT changes likely?

The Office of Tax Simplification (OTS) reported on 7 November. What might happen to VAT as a result?

The OTS reported on our VAT system and made a significant number of recommendations including changes to the VAT registration threshold. Any reduction in the VAT registration threshold is likely to result in many more small businesses having to register, as is already the case in many other EU member states.

The other major recommendation relates to considering the scope for the zero rate, reduced rate and exemption to apply to supplies. At present the UK cannot change the supplies that qualify for relief, other than making a zero rate or reduced rate supply standard-rated. This will change post-Brexit.

Charities, not for profit organisations and education suppliers may benefit from potential changes. For example, the scope to zero rate supplies to charities could be extended.

The OTS report also considered VAT administration and how HMRC can improve in this area, notably in how it responds to requests rulings, issues penalties for voluntary correction of errors and administers the option to tax system. Time will tell whether we actually see any improvements.

 

 

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