Registration and deregistration thresholds
From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000.
Use and enjoyment provisions for business to consumer (B2C) mobile phone services
From 1 August 2017 the government will remove the VAT “use and enjoyment” provisions for business to consumer mobile phone services to individuals. This will resolve the inconsistency where UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU (UK VAT will thus now be applied on all mobile phone use by UK residents). It will also ensure mobile phone companies cannot use the inconsistency to avoid UK VAT. This will bring UK VAT rules into line with the internationally agreed approach.
Tackling VAT evasion - fraud in the provision of labour in the construction sector
Later this month, the government is to begin a consultation on options to combat missing trader VAT fraud in the provision of labour in the construction sector, in particular, the option of applying the reverse charge mechanism so that the recipient accounts for VAT. It will also consider other changes including to the qualifying criteria for gross payment status within the Construction Industry Scheme.
Tackling VAT evasion – 'split payment' model for online sales
Building on the measures introduced in Budget 2016, the government will call for evidence later this month on the case for introducing a new VAT collection mechanism for online sales. This would allow VAT to be extracted directly by the Exchequer from online transactions at the point of purchase (thus the buyer pays the net element of the purchase price to the supplier and the VAT element to the government). This is often referred to as a ‘split payment’ model. This is the next step in tackling non-payment of VAT by some overseas traders selling goods online to UK consumers.
Tackling VAT evasion - penalty charges in fraud cases
As announced in the Autumn Statement 2016, the government will legislate in Finance Bill 2017 to introduce a penalty for participating in VAT fraud. Following consultation on the draft legislation, some minor changes have been made to improve the clarity of the measure and also to limit the naming of a company officer to instances where the amount of tax due exceeds £25,000. The new penalty will take effect once the Finance Bill receives Royal Assent.
‘Making Tax Digital’ implementation
The legislation to implement digital record keeping to be included in Finance Bill 2017 will include powers to make regulations, including on the form and content of periodic updates and ‘end of period statements’. There are also powers to set out the scope and operation of certain exemptions. Following consultation, the legislation published in draft on 31 January 2017 has been revised and expanded to introduce a clause amending Schedule 11 to the Value Added Tax Act 1994, to enable equivalent regulations and exemptions for VAT purposes to those proposed for Income Tax.