Commenting on the Spring Statement, Simon Shaw, partner and head of indirect tax at KPMG in the UK said:
“Efforts to address small business concerns over VAT are welcome. But, any radical reform to the VAT system will be held back by European Union directives until after Brexit. For the time being, we are unlikely to see anything major. This is a shame because the burst of entrepreneurism that the UK needs to unleash after March 2019 will rely on small businesses standing on the best possible footing.
“For smaller businesses, the VAT threshold is not as straightforward as taking the VAT bill on the chin when taxable turnover reaches £85,000, which is a limit that the Chancellor announced last year and will be frozen for two years.
“Difficult decisions need to be made by business owners as to whether they should even consider pushing sales beyond the threshold, or whether the extra cost can be passed on to customers and woven into the business model. The answers to these questions will differ greatly between sectors, products and services.
“A consultation on smoothing the current registration cliff edge and a call for evidence has been issued today. It includes many financial and administrative options that could encourage entrepreneurs to seek out growth opportunities and not have their ambitions limited by a hard threshold.”
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About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.