The UK Autumn Budget was announced on 22nd November 2018.
UK VAT Registration Threshold
The UK government have decided to keep the VAT registration at £85,000 from 1 April 2018, where it will remain for the next two years. The de-registration threshold will also remain at £83,000.
In the meantime, they will be consulting on the design of the threshold in response to the Office for Tax Simplification’s (OTS) report. The OTS noted that the threshold in the UK is high compared to many other EU Member States and hence, it might be reasonable for the UK to reduce its level.
VAT and Vouchers
The government will consult on plans to bring in new legislation surrounding how VAT is accounted for when payments are made using vouchers. This is to bring the UK in line with similar changes being made across the EU so that when a customer pays with a voucher, the business accounts for the same amount of VAT as when any other forms of payment are used.
Online VAT Fraud
Having been announced in the previous budget, the government will now legislate in the Finance Bill 2017-18, coming into force following Royal Assent in the Spring, to extend HMRC’s powers to hold online marketplaces jointly and severally liable for any VAT that a non-UK business selling goods on their platforms fails to account for. This is will be where the overseas trader was not registered for VAT in the UK and the online marketplace knew or should have known that the overseas trader should be registered for VAT in the UK.
They have also announced that they will extend the above powers so this includes all traders, meaning both UK and overseas traders. This extension will help tackle the UK hidden economy and eliminate the risk of overseas traders establishing a UK shell company simply to escape the joint and several liability legislation noted above.
In addition to this, the legislation will also include a requirement for the online marketplaces to ensure that VAT numbers displayed for businesses operating on their website are valid. They will also be required to display a valid VAT number when they are provided with one by a business operating on their platform.
Split Payments – Tackling online VAT Fraud
Having requested a call for evidence on the split payment model in the spring budget 2017, the government will publish their response to this in December 2017. This could see VAT being accounted for and paid to HMRC at the time of payment when consumers buy goods rom marketplaces. This is as opposed to the current model whereby the supplier registers and accounts for the VAT.
Digital Platforms – Tackling online VAT Fraud
The government will publish a call for evidence to explore what more digital platforms can do to prevent non-compliance from the users of their platforms.
Making Tax Digital (MTD)
It was announced that, as legislated in the Finance Act (No 2) 2017, no business will be mandated to use MTD until April 2019. It will only be businesses with turnover above the VAT registration threshold who will have a mandatory requirement to use MTD at that point, and will only be required to do so to meet its VAT obligations. It will only be once the system has been shown to work will they look to widen the scope of MTD. Further details on how the VAT return information will be submitted is expected in the next few months.
It was acknowledged that following Brexit, UK businesses may face increased import VAT bills which could have negative cash flow implications. Some businesses currently enjoy deferment of these payments but research will be undertaken to see if further steps to assist businesses can be implemented. It is likely that such steps might include the option to report and declare import VAT on VAT returns, which is something already allowed by a number a EU Member States.
Reverse charge for labour supplies
From 1 October 2019 a reverse charge (which shifts the obligation to account for VAT onto the recipient of a supply) will be introduced or supplies of labour in the construction market. A long lead time has been given to this change in order that a consultation can be undertaken and businesses given sufficient lead time to make changes.