Value added tax (VAT)
Registration and deregistration thresholds
The VAT registration threshold will be increased from £83,000 to £85,000 from 1 April 2017. The deregistration threshold will go up from £81,000 to £83,000 from the same date. The registration and deregistration threshold for relevant acquisitions from other EU member states will also increase to £85,000.
New penalty in fraud cases
A new penalty will be introduced for participating in VAT fraud, as announced at Autumn Statement 2016. The penalty will take effect once the Finance Bill receives Royal Assent. Following consultation on the draft legislation, the naming of a company officer will be limited to instances where the amount of tax due exceeds £25,000.
‘Split payments’ model
The government is to call for evidence 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, a model often referred to as ‘split payment’. The aim is to tackle the non-payment of VAT by some overseas traders selling goods online to UK consumers.
Mobile phone services
The government will remove the VAT ‘use and enjoyment’ provision for mobile phone services provided to consumers. The measure will bring those services used outside the EU within the scope of the tax. It will also ensure mobile phone companies cannot use the inconsistency to avoid UK VAT.
Fraud in the provision of labour in the construction sector
The government is to consult on a range of policy options to combat missing trader fraud in supplies of labour in the construction sector. Options include a VAT reverse charge mechanism so that the recipient accounts for VAT, and changes to the qualifying criteria for gross payment status in the Construction Industry Scheme.
The flat rate VAT scheme is changing for ‘limited cost traders’ from 1 April. Take advice on what your options are to counter an effective tax increase.