VAT Registration Threshold
As there are so many fundamental changes on the horizon for small businesses to get to grips with in the next few years, such as Brexit and HMRC’s Making Tax Digital programme, LITRG strongly urges caution from the Government when considering introducing any further substantial changes to the business landscape, such as a reduction in the current VAT registration turnover threshold of £85,000. LITRG would like to see further work in this area focusing on the introduction of a smoothing mechanism to ease the tax costs and competition issues which arise when crossing the threshold, particularly if the threshold is to be lowered.
LITRG have recently responded to HM Treasury’s call for evidence in relation to the VAT registration threshold on behalf of small businesses who, despite having low profits, fall within the VAT net due to the level of their turnover.
We also warn the Government that any substantial reduction in the registration threshold in the UK might entice smaller businesses into the hidden economy that might otherwise be compliant due to the overwhelming burden that VAT is perceived to be by many small businesses.
The full response can be found here: VAT Registration Threshold – LITRG response