Market leading insight for tax experts
View online issue

Consultation on options for the VAT registration threshold

printer Mail

Following recommendations by the OTS in its report on VAT simplification, HM Treasury is consulting until 5 June 2018 on the effects of the current VAT threshold on business growth, and ways to smooth the cliff-edge effect for businesses of reaching the threshold.

The chancellor announced at Autumn Budget 2017 that the government was not considering a reduction in the threshold. Policy options considered in this consultation include:

  • the EU proposal for SMEs, which would allow businesses to exceed the threshold by 50% for up to a year without registering, and introduce separate thresholds for absolute exemption and simplified administration;
  • two options for ‘administrative smoothing’, suggested by the OTS:
  • extending the first period for which a business has to account for and pay VAT to 6 months; and
  • applying the threshold test over two years rather than over a single year;
  • financial smoothing, including examination of practices in other countries, the OTS suggestion of early years’ reductions, and a progressive structure along income tax lines.


Issue: 1391
Categories: News , Indirect taxes , VAT