26 Jun The changing shape of VAT post-Brexit
Who should take the credit (or the blame) for good-old Value Added Tax (VAT)? Our French friends put it down to an idea they had back in the 50s, while our German cousins believe they first come up with the notion many years earlier. The only thing that is known for sure, is that it did indeed originate in Europe, and it has enjoyed enormous success (from the taxman’s point of view of course) ever since.
From a business viewpoint, it’s something that you simply can’t afford to ignore. If you do, you will face a severe penalty, so getting the right VAT advice from an accountancy expert is imperative.
Why VAT was introduced
When VAT came into effect throughout the EU, the Commission stated that it would play a key part in making for an efficient European trading zone, and a more tightly joined community. Now of course, with Brexit negotiations underway, our departure from the EU could signal an opportunity to develop some other system of taxation that better suits the revised need of a future UK economy.
The United States resisted introducing VAT because they thought that, as a means of collecting tax, it gave States unreasonable strength. Other countries around the world however, delighted in this power.
A risky business
Here in the UK, HMRC currently collect in the region of £100 billion worth of VAT each and every year. VAT registration is a must for all companies with an annual turnover of £85,000 or more. For the Chancellor of the Exchequer to even contemplate toying around with this, it would take an enormous leap of faith on his or her part.
In a post-Brexit world, only UK rules will apply. At the moment, EU rules are still in force, but as time progresses, the whole VAT landscape in the UK could, and probably will, change.
Keeping up to date with current VAT advice
Over the next 21 months or so, new business will need to complete VAT registration as is. However, if you want to stay abreast of what could be a changing VAT structure here in the UK, we would be pleased to act as your accountancy consultants, keeping you up to date with appropriate VAT advice.