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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

    We found that VAT registration ensured that our books were upto date at least every 3 months :)

    No we are much better organsied than that and ensure that our book keeping is updated on a daily basis.

    I think that if the threshold was £20k it would create a level playing field for every business.

    • PRO
      I disagree if you want a “level playing field” it would have to be zero. I bet there is loads of sole traders making less than £20k in garden maintenance alone.
    • PRO

      no it wouldnt would it ? 

      it creates a massive cash economy 

      im happy you and others that have a PLUS vat business -- but theres a majority that dont 

      ive tried to find the stats but doesnt seem Inland Revenue can process them 

      it appears the 'average' self employed person earns lower than the employed - as in stated 2013-2014 as 2013/14 £10,800

      i see this as stupidly low but who wants to guess a Forum percentage of over VAT or UNDER ?

      I have no idea but if in here it 25 % OVER 25 % just under and 50% below and this is a current professional forum of only 5800 members with 4.5 million plus stated self employed then it wouldnt be unrealistic to assume including IR stats that the VASTE majority of self employed are currently well under present level 

      Even if theres a huge submarine economy just staying under the limit - implication is that  the massive minority are above or just under present limits and that the huge majority are way under. 

      Sure pick up the floaters near by - but if Government goes for the mass majority just getting by at way under this limit , it will be a cash cow to hell 

      As if we dont have to listen to enough daily crap news about the super rich and the tax avoiders every day -

      do not as a ruling powerconsistnatly reward the top minority at the expense of the majority 

      • PRO

        Relevent stats supporting, or not the various scenarios being considered by HMRC are contained within their report.

        • PRO
          Probably shame I nearly fell asleep by page 7:)
  • PRO

    Further to the earlier comments picked up on by Richard, it appears that Lewis is trying to avoid the benefit in kind portion of the VAT on his jet when swanning around in it out of working hours.

    http://www.autoexpress.co.uk/vans/95748/double-cab-pick-up-truck-ta...

    Double-cab pick-up truck tax benefits explained
    HMRC’s VAT and Benefit-in-Kind tax rules for double cab pick-ups make them seriously attractive as company vehicles
    • PRO
      I’ve read about it. Don’t really care if I’m honest. Like gary said if he’s done wrong he will pay the price. You can almost guarantee he has followed the rules to the letter if not the spirit.
      My point was you seemed to be tarring people who have pick ups with the same brush.
      Double-cab pick-up truck tax benefits explained
      HMRC’s VAT and Benefit-in-Kind tax rules for double cab pick-ups make them seriously attractive as company vehicles
  • PRO
    I've no intention of tarring everyone with the same brush, though I have worked for a few firms where the office manager has a double cab 4x4 pickup, which raises a smile as does seeing a kitchen salesman in one.

    As you say Lewis has the benefit of tax advisors, unfortunately if the VAT threshold is lowered it is doubtful that those forced to register will be in a position to benefit from professional advice. It will become individuals responsibility to ensure they comply or face penalties.

    Will any benefits gained by being able to reclaim VAT on expenses be lost on getting professional tax advice. Maybe joining a trade association will help those requiring access to tax advice, maybe there will be a plethora of VAT seminars to attend to get up to speed?

    It will be a whole new ballgame for most traders if the threshold is lowered.
  • PRO
    Any tax has to been seen to be fair, clearly vat at the moment is not fair and the report looks to normalise the vat scheme to what the rest of the world pays. The devil will be in the detail as they may do nothing but with a tax take of 1-2 billion they could have funding for lots more officials to make sure the cash in hand market does not grow disproportionately, I wonder if this would of ever come up before Brexit?
    • What difference would Brexit make?

      The report suggests that most EU countries set a lower threshold already.

This reply was deleted.

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