Budget November 2017 VAT announcements

See the Chancellor’s Budget statement, section 4.18 for more details on specific issues http://tinyurl.com/yb4y77sd

Main headlines

  • VAT registration/de-registration limits to remain at current levels (£85k/£83k) for 2 years while the goverment considers recent proposals to reduce the limits significantly   See my previous blog and Budget Statement section 4.18 http://tinyurl.com/yb4y77sd
  • Online sale platforms  There are a number of measures including the introduction of anti-avoidance provisions for online vendors to introduce joint & several liability for VAT on sales by both UK and overseas vendors and requirement to show vendors’ VAT registration numbers – see Budget statement section 4.22 http://tinyurl.com/yb4y77sd
  • Tax administration HMRC has confirmed plans to pursue the “Making Tax Digital” process for VAT from April 2019: http://tinyurl.com/yb4y77sd
  • Brexit  One of the benefits of EU membership is the “postponed accounting” for VAT that allows UK businesses to “import” goods from other EU countries without paying import VAT at the point of entry.  HMRC has be reviewing this issue as part of the Brexit process – Budget Statement section 4.18 http://tinyurl.com/yb4y77sd
  • Other measures include the extension of the VAT reclaim procedure for certain non-business bodies and changes to the rules about vouchers that will require retailers to pay VAT on the normal sales price rather than any reduced value.

Budget November 2017: Construction industry new avoidance rules delayed to 2019

Earlier this year, HMRC announced a consultation process about proposed changes to the VAT accounting on construction work.  It would mean that the customer (which is usually the property owner) has to pay the VAT on construction work direct to HMRC instead of paying the contractor.  In practice, this would be a pretty seismic development for the construction industry.

The Chancellor confirmed that the start date for this change will be 1 October 2019 – see Budget Statement section 4.20 http://tinyurl.com/yb4y77sd.

This delay is welcome news, giving all parties time to understand how the new rules will work and to make any necessary changes to accounting systems.

Budget November 2017

So for once, a pretty “quiet” budget for most SME businesses.  But my main concern is the effect of significant changes to the VAT registration limit in the future.  If your business income is less than the current limit and you’re not registered for VAT, you want to make the most of the next couple of years and not being registered for VAT.

Marie

November 2017