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PRO

VAT threshold to be lowered ?

I've long believed that the VAT threshold should be lowered or abolished to provide every business a level playing field, to reduce cash-no-vat transactions, encourage growth and generate additional tax revenue. It's a subject much discussed on LJN in the past.

The Government's OTS has just published its first review of VAT thresholds, hence are actively considering options to simplify the already complex VAT area.

Various financial pundits are suggesting a reduction to £26K or even £20K could be on the cards, with some even hoping for a £0 threshold (unlikely, I'd suggest).

The FSB produced a White Paper some time ago and are expected to review its recommendations for the SME sector to the Government.

So, it's a "watch this space" situation for now............

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Replies

  • PRO
    Would be about time..... after reading the paper I did not realise that at 85K the uk was the highest threshold in the world with the EU having a €10K threshold....
    • PRO

      sounds good for the big players and bad for the small ones ?

      cant see the general public liking VAT added to small scale gardening on a mass level 

      would imagine faced with a self employed small scale one man band charging a decent charge that suddenly adds 20 % - the cash in hand blagger will look far to value for money to avoid. 

      • PRO

        i agree with evolution and whatever the government does we move onwards 

        but i do feel presently there isnt a great deal of support for the small scale self employed - this would without a doubt increase the cash in hand work going on. 

        what do they want -- less cash in hand or more ? playing by the book isnt exactly rewarded these days 

  • PRO

    After reading this, there's little worth speculating in the next couple of days with a report expected to be published on Tuesday 7th. 

    Hopefully they move quickly should they wish to implement changes as in our line of work we're going to want to know how we can set ourselves up for 2018. 

    My business is getting to this cliff edge and I'd already a plan for it but this could soon change my situation along with many others. 

  • I’ll chuck another option into the hat. 5% VAT flat rate for everyone, no claiming any back whatever size your business, incentivise people into more ‘larger ticket’ purchases, discourage ‘cash in hand’ less bureaucracy for the whole country to pay for at HMRC. There might be some downsides, haven’t thought of them yet though (i’m Not VAT reg yet)
    Seems to me utterly pointless that anyone turning over £85k plus has to charge VAT, buy can claim all that they pay themselves back!!
    • PRO

      Much the same reason expenses are tax deductable?

      • Expenses should be essential for running the business. VAT is essential for running the country. Why not just pay the 5% on everything and keep it simple. 5% on everything is a hell of a lot, 5% to the end purchaser is very little on each transaction.
        • PRO

          Business's that run with less than 5% profit margins? What then?

          • That would be Tesco gone then :)
            VAT shouldn’t really have anything to do with your profit though should it. It’s a tax added onto what you sell and needs to be planned for.
  • I don't believe that it would be any benefit small one man bands would end up going to the wall as they would find it very difficult to run a VAT business and more cash jobs would be done because of it. 

    Although it would be better to have a few of the smaller players out of the way????

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