The Office of Tax Simplification has begun conducting a simplification review into the VAT system. The financial secretary to the Treasury has written to the OTS, setting out the broad areas for review, which should not include a fundamental reassessment of VAT rates, in view of forthcoming negotiations over the UK’s exit from the EU. The financial secretary writes:
‘I would like to request that the OTS carry out a review into the VAT system, to ensure that it is fit for purpose in our modern economy. The review should focus in particular on VAT accounting simplifications for SMEs, including annual and cash accounting, the flat rate scheme and the registration threshold. It could examine the rules for calculating VAT due to HMRC by businesses that make both VATable and VAT exempt supplies and it might also consider the complexity for businesses and administration under the current rate structure. It should, however, avoid any more fundamental review of VAT rates and be mindful of sensitivities post-referendum. Revenue neutrality, countering avoidance and thinking about how we might more effectively protect VAT revenues in the future remain key objectives of the government.’
The Office of Tax Simplification has begun conducting a simplification review into the VAT system. The financial secretary to the Treasury has written to the OTS, setting out the broad areas for review, which should not include a fundamental reassessment of VAT rates, in view of forthcoming negotiations over the UK’s exit from the EU. The financial secretary writes:
‘I would like to request that the OTS carry out a review into the VAT system, to ensure that it is fit for purpose in our modern economy. The review should focus in particular on VAT accounting simplifications for SMEs, including annual and cash accounting, the flat rate scheme and the registration threshold. It could examine the rules for calculating VAT due to HMRC by businesses that make both VATable and VAT exempt supplies and it might also consider the complexity for businesses and administration under the current rate structure. It should, however, avoid any more fundamental review of VAT rates and be mindful of sensitivities post-referendum. Revenue neutrality, countering avoidance and thinking about how we might more effectively protect VAT revenues in the future remain key objectives of the government.’
