Review of UK VAT System

Within the Autumn Statement 2016, the government has requested that the Office of Tax Simplification (OTS) review the current UK VAT system in order to assess whether it is “fit for purpose in the modern economy”.

 

Specific areas that the OTS are reviewing, and therefore areas that may be subject to change in the future, include the flat rate scheme, the VAT registration threshold and annual/cash accounting schemes. There will also be a particular focus on VAT accounting simplifications for small and medium-sized businesses and the rules for partially exempt traders. Other key objectives outlined by HMRC include revenue neutrality, countering avoidance and the protection of future VAT revenues.

 

However, HMRC have stated that this review will not be all-encompassing and will therefore not examine VAT rates currently applicable to supplies of goods and services in the UK in view of potential changes caused by the UK’s exit from the European Union.

 

If you or one of your clients may be effected by the issues currently under review by the OTS, please call our free VAT helpline to discuss any potential changes that may affect the way your business is required to account for VAT.

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