The Chartered Institute of Taxation has welcomed today’s call for evidence from the Treasury on the VAT registration threshold.
Alan McLintock, Chair of CIOT’s Indirect Taxes Sub-Committee, said:
“This is a big, broad consultation on issues around the VAT registration threshold. We welcome it.
“We support strongly making the rules on VAT less complex and easier to apply, in the expectation that it should lead to less uncertainty among business, and fewer disputes with HMRC.
“As the Office of Tax Simplification’s recent study showed, there are aspects of VAT that have distortive effects on some small businesses. The registration threshold is top of this list.
“There is a strong case for some kind of smoothing mechanism to reduce the financial and administration impacts of the threshold. It is crucial that any such mechanisms are simple for business people to understand and operate. There may also be a case for refreshing or extending the VAT Flat Rate Scheme.
“I am pleased to see a range of options being put forward by the Treasury, and to see the Government thinking imaginatively about how to achieve a wider reach with their call for evidence, including a ‘survey monkey’ survey aimed at small businesses.
“This is clearly a time of change for VAT, with many VAT registered businesses being the guinea pigs for Making Tax Digital in 2019 (a factor which HMRC recognise could lead to further ‘bunching’ just below the threshold) and Brexit bringing in further changes, especially for exporters.”