UK – changes to VAT

United Kingdom raises VAT Registration Threshold

On 8th March, 2017 the UK Chancellor announced in his Spring Budget that the annual VAT ‘Registration Threshold’ will rise from £83,000.00 to £85,000.00, with the ‘De-Registration Threshold’ also increasing from £81,000.00 to £83,000.00.

These new thresholds will apply from 1st April, 2017 and will only apply to UK resident businesses. Non-resident businesses, face a nil VAT ‘Registration Threshold’. The only exception to this rule will be EU businesses selling B2C goods via the internet or similar, they can take advantage of the ‘Distance Selling Thresholds’ of their EU country.

The UK raises VAT Registration Threshold

Also during the Spring Budget, the UK Chancellor announced a public consultation on introducing anti-VAT fraud split payments on B2C e-Commerce.
This mechanism would work by UK consumers automatically for the VAT element of any online purchase from overseas sellers straight to HMRC. The UK governments aim is to eradicate the increasing problem of VAT fraud by non-EU online sellers, specifically from China. It has been estimated this is costing the UK up to £2 billion per year. A similar measure has been used by the Italy government with some success.

The UK in 2016 announced a range of procedures to curtail the problem of non-EU sellers failing to VAT register and charge the accurate VAT rates. These comprised of making online market platforms potentially liable to any missing VAT.