Phillip Hammond has today delivered his Autumn Budget. Here we look at the key VAT measures which have been announced.
VAT registration threshold
The VAT registration threshold will be maintained at £85,000 for two years from April 2018. There had been speculation that the Government may seek to lower the threshold in line with other European countries following the recent report by the Office of Tax Simplification (OTS). In response to the report the Government will consult on whether changes could be made to better incentivise business growth.
Fraud in the provision of labour in the construction sector
We reported in our Spring Budget VAT Focus that the government would consult on a range of policy options to combat supply chain fraud within the construction sector. Following the consultation, the government will introduce a VAT domestic reverse. This will shift responsibility for paying VAT along the supply chain to remove the opportunity for it to be stolen. Changes will have effect from 1 October 2019.
Online VAT fraud
The government has announced a number of measures to tackle online VAT fraud by strengthening and extending existing powers that make online marketplaces responsible for the unpaid VAT of their sellers. These measures will come into force as part of Finance Bill 2017/18 and will include:
- Legislation to extend HMRC’s powers to hold online marketplaces jointly and severally liable for the unpaid VAT of overseas traders on their platforms to include all traders (including UK traders), as well as any VAT that a non-UK business selling goods on these platforms fails to account for, where the business was not registered for VAT in the UK and that online marketplace knew or should have known that the business should be registered for VAT in the UK.
- Legislation to require online marketplaces to ensure that VAT numbers displayed for businesses operating on their website are valid.
We reported in our Spring Budget VAT Focus that the government would launch a call for evidence on and consider a new VAT collection mechanism that will harness technology to allow VAT to be extracted directly by the Exchequer from online transactions at the point of purchase. This is often referred to as a ‘Split Payment’ model. Following the call for evidence, the government will publish a response in December.
The government will amend legislation in Finance Bill 2017/18 to ensure UK Combined Authorities and certain fire services in England and Wales will be eligible for VAT refunds. Grant funding will also be provided under the Accident Rescue Charities Grant Scheme to help accident rescue charities meet the cost of VAT which would be irrecoverable.
The government will publish a call for evidence in early 2018 to consider the impact of VAT on tourism in Northern Ireland. This will be reported in the 2018 Budget.
The government will consult on plans to legislate in Finance Bill 2018/19 to ensure that when customers pay with vouchers, businesses account for the same amount of VAT as when other means of payment are used. This will align the UK with similar changes being made across the EU.
Should you wish to discuss any of the VAT announcements made in the Autumn Budget 2017 please contact us.