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Following on from the recent Office for Tax Simplification report into the current VAT system there has been concern that HMRC would look to reduce the VAT registration threshold.
Philip Hammond did address this report during his speech but confirmed that the VAT registration threshold, rather than seeing the usual small increase, would be frozen for the next two years.
Following this two year period, the UK will be likely to have left the EU and at this point there would be more flexibility to introduce a smoothing mechanism to limit the impact of the current cliff edge system, which may in turn then see the threshold reduced.
At least for now though, the threshold has not been reduced keeping many small businesses outside of the VAT regime.
Following on from a consultation looking at options for tackling fraud in construction labour supply chains, a domestic reverse charge will be introduced to prevent VAT losses. Such a system already exists in other sectors, such as telecommunications, and shifts the responsibility for paying the VAT along the supply chain.
This is to be introduced from 1 October 2019, giving both businesses and the Government the opportunity to prepare for the change. It will be interesting to see whether there will be any de-minimis limit introduced for this new requirement.
Under current EU rules, businesses benefit from postponed accounting for VAT when importing goods from the EU, allowing a significant cash flow advantage. It is not yet clear whether this benefit will be retained following Brexit however the government has identified this as a potential issue and will be looking at options available to mitigate any adverse cash flow impacts for businesses, post Brexit.
A Government consultation will take place on plans to legislate in the Finance Bill 2018-19 to ensure that when customers pay with vouchers, businesses account for the same amount of VAT as when other means of payment are used.
This is a new development and it will be interesting to see what proposals are introduced in relation to this.
The Chancellor announced plans to introduce legislation to extend HMRC’s powers to hold online market places jointly and severally liable for any unpaid VAT of UK traders operating through their platform. This is an extension of the existing legislation which only impacts on overseas traders and would appear to be a positive step in reducing VAT fraud.
The Chancellor announced good news for UK Combined Authorities and certain fire services in England and Wales, with them becoming eligible for VAT refunds.
Grants will also be provided to help accident rescue charities meet the cost of VAT, which would normally be irrecoverable.
Fuel duty has been frozen for the eight year in a row, with it being estimated that this will save the average driver £160 a year.
The duty rates on beer, cider, wine and spirts have also been frozen.
Whilst the recent budget didn’t throw up any significant headline announcements for our Manufacturing Sector, there were various items outlined which should have a positive impact on the sector, including: Research & Development
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