Your ideas wanted on simplifying VAT
Changes to the Flat Rate Scheme might not be the only Value Added Tax reform that freelancers are forced to adapt to in 2017, as VAT is now being probed by the OTS.
Best-known among freelancers for scrutinising IR35, the Office of Tax Simplification says it will develop recommendations to simplify VAT, and hand them to the chancellor next year.
The office’s brief, specifically to “identify simplification opportunities” to VAT, will raise eyebrows among contractors’ tax advisers, as well as contractors themselves.
Only last month, the government introduced the term ‘limited cost’ trader into the FRS; a move that will “inevitably complicate” a scheme that was only set up to simplify VAT.
Alongside general VAT admin, “special accounting schemes” are within the terms of the OTS’s review, as is almost any other VAT issue that traders who get in touch wish to bring up.
“We are interested in hearing from businesses, advisers and others who deal with VAT about the issues they find most complex and any ideas they might have to simplify the system,” the office said.
But the OTS will not be acting on any submissions about the EU’s VAT rules, VAT MOSS or other VAT “issues likely to be significant in the government’s consideration of Brexit.”
And while it won’t ignore Brexit – it says it will “actively” bear the context in mind when drawing up simplification opportunities, safer ground for contractors’ comments include the VAT registration threshold, the VAT penalty regime, VAT under Making Tax Digital and the VAT appeals process.