Increases could delay VAT registration for 4,000 small business.

From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000, in line with inflation. Also, the registration and deregistration threshold for relevant acquisitions from other EU member states will also be increased from £83,000 to £85,000.

It is estimated that these increased thresholds will prevent around 4,000 small businesses from having to register for VAT for another 12 months.

Making it consistent for everyone

VAT on telecoms for use and enjoyment provisions for business-to-consumer mobile phone services

The government will remove the VAT use and enjoyment provisions for business-to-consumer mobile phone services to individuals. This will resolve the inconsistency where UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU. It will also ensure that mobile phone companies cannot use the inconsistency to avoid UK VAT. This will bring UK VAT rules into line with the internationally agreed approach.

Measures to put a stop cap on VAT evasion through missing trader fraud

The government will launch a consultation on 20 March on a range of policy options to combat supply chain fraud in supplies of labour within the construction sector. Options include a VAT reverse-charge mechanism so the recipient accounts for VAT. It will also consider other changes, including to the qualifying criteria for gross payment status within the Construction Industry Scheme.

Split-payments model

The government will publish a call for evidence on 20 March on the case for a new VAT collection mechanism for online sales. This would harness technology to allow VAT to be extracted directly from transactions at the point of purchase. This type of model is often referred to as split payment.

Article from ACCA In Practice