Opinion Former Article

VAT threshold – CIOT welcomes ‘big, broad consultation’

The Chartered Institute of Taxation has welcomed today’s call for evidence from the Treasury on the VAT registration threshold.

Alan McLintock, Chair of CIOT’s Indirect Taxes Sub-Committee, said:

“This is a big, broad consultation on issues around the VAT registration threshold. We welcome it.

“We support strongly making the rules on VAT less complex and easier to apply, in the expectation that it should lead to less uncertainty among business, and fewer disputes with HMRC.

“As the Office of Tax Simplification’s recent study showed, there are aspects of VAT that have distortive effects on some small businesses. The registration threshold is top of this list.

“There is a strong case for some kind of smoothing mechanism to reduce the financial and administration impacts of the threshold. It is crucial that any such mechanisms are simple for business people to understand and operate. There may also be a case for refreshing or extending the VAT Flat Rate Scheme.

“I am pleased to see a range of options being put forward by the Treasury, and to see the Government thinking imaginatively about how to achieve a wider reach with their call for evidence, including a ‘survey monkey’ survey aimed at small businesses.

“This is clearly a time of change for VAT, with many VAT registered businesses being the guinea pigs for Making Tax Digital in 2019 (a factor which HMRC recognise could lead to further ‘bunching’ just below the threshold) and Brexit bringing in further changes, especially for exporters.”

Notes for editors

1.       The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: George Crozier, Head of External Relations, 0207 340 0569 or GCrozier@tax.org.uk (Out of hours: 07740 477 374)

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