Registration and deregistration thresholds
Once the terms of the EU exit are clear, the government will continue to consider ways of removing the ’cliff edge’ impact of VAT registration, but in the meantime will maintain the registration threshold at the current level of £85,000 at least until April 2022.
Similarly, the deregistration threshold remains at £83,000.
Vouchers
Following consultation, the government will legislate in Finance Bill 2018-19 to implement EU legislation which ensures that the correct amount of VAT is charged on what the customer pays, irrespective of whether payment is with a voucher or other means of payment.
VAT grouping
The government will legislate in Finance Bill 2018-19 to extend the eligibility to join a VAT group to certain non-corporate entities with effect from 1 April 2019. In addition, revised VAT grouping guidance will be issued to:
- amend the definition of ‘bought in services’ to ensure that such services are subject to UK VAT; and
- provide clarity to businesses on HMRC’s protection of revenue powers and treatment of UK fixed establishments.
Tackling VAT evasion:
1. Fraud in the provision of labour in the construction sector
With effect from 1 October 2019, and as announced at the Autumn Budget 2017, the government will introduce a VAT domestic reverse charge to prevent VAT losses through so-called ‘Missing Trader’ fraud. This occurs when traders collect VAT on their sales but go missing before passing that VAT on to HMRC. This will shift responsibility for paying VAT along the supply chain to remove the opportunity for it to be stolen by those traders. The government is publishing secondary legislation alongside the Budget to implement this change.
2. Online sales – ’split payment’ model
Under a ’split payment’ model, the VAT element of the customer’s payment would be deposited directly with HMRC rather than being collected by the supplier. Following the consultation launched in the spring, the government is publishing its response, and will establish an Industry Working Group to address some of the main challenges associated with this policy through close cooperation with stakeholders.
And finally………………..
3. Making Tax Digital (MTD) implementation
As there were no announcements in the Budget, it must be presumed that MTD implementation is to proceed as planned from 1 April 2019 for those businesses with turnover above the VAT threshold, subject to a delay of six months to 1 October 2019 for certain “more complex” businesses.