VAT Registration Changes

With Making Tax Digital just around the corner what will HMRC be doing to encourage and/or enforce you to comply with VAT registration rules and to pull more people into their digital reporting net?

https://www.gov.uk/government/consultations/vat-registration-threshold-call-for-evidence/

A cynical view could be interpreted from this if their line of thought is that traders deliberately refuse work in order to stay below the VAT registration threshold. Or reading between the lines further that HMRC believe that businesses simply do not declare all of their income in order to avoid VAT registration.

What might change?

So how do HMRC intend to catch these businesses and increase the VAT yield?

The threshold for registration has been frozen for 2018/19 and 2019/2020.

HMRC could therefore identify and review businesses whose turnover historically crept up behind the VAT registration threshold and suddenly freezes for a number of years. They could very well see this as a sign of income being suppressed or omitted.

Additionally if businesses having been teaming and lading (deferring income) from one year to the next in order to stay below the VAT registration threshold then a frozen VAT registration threshold would be one way of flushing this out.

https://en.wikipedia.org/wiki/Teeming_and_lading/

Anything else to watch out for?

An additional relaxing of the rules will allow businesses to venture into the realm of needing to VAT registration but to duck out if their turnover slips back down.

https://www.accountancylive.com/spring-statement-2018-review-vat-threshold/

But, we suspect that the ones that slip back down and out of the VAT net are the exact businesses that HMRC are aiming to identify as part of this overhaul. So be very wary if your business happens to follow this trend – you’re likely to be in the spot light.

Worried? Don’t be, help is at hand

http://www.darrallandcompany.com/contact-us/

We will guide you through.