The Chancellor has not made many changes to VAT, with Making Tax Digital and Brexit on the horizon this is understandable.

VAT registration threshold

Although there has been a lot of discussion about the effect of the present relatively high registration threshold, it will remain at £85,000 for the next two years.  The deregistration threshold will remain at £83,000.   Perhaps it is significant that it has not been raised in line with inflation, as has been the case for many years, indicating that the threshold might be frozen, or even reduced in future.

Online market places

Measures were already in the pipeline to make operators of online market places jointly liable with overseas traders, who sell via the site, for the traders’ UK VAT liabilities, if the traders are evading their VAT obligations.

The measures will now be extended so that the operators of online market places are potentially jointly liable for the VAT liabilities of UK traders selling through the sites.  If UK traders quote a VAT number on the site the operator will be responsible for checking the validity of that number.

Future changes        

  • The Government will consider making changes to the VAT grouping conditions.
  • Draft legislation will be published in 2018 regarding introducing a domestic reverse charge to supplies made by certain contractors in the construction industry. This major change will potentially affect a large number of businesses but will not be introduced until 2019.
  • There will be further consultation on “split payments” – this is where the output VAT on certain electronic sales transactions is automatically submitted to HMRC at the time of the transaction.
  • There will be further consultation on the VAT treatment of vouchers.
  • The Government will consider whether changes are needed to the collection of import VAT. Once the UK leaves the EU, goods coming from EU countries will be subject to import VAT at the UK border and so, in future, businesses importing goods from the EU will suffer a cash flow disbenefit.