VAT Flat Rate Scheme

No VAT Threshold Change until 2022

For around 12 months now there has been much discussion about a review of the point at which companies must register for VAT, the VAT Threshold. Currently set at £85,000 of taxable turnover, the Chancellor was reported as planning a reduction of this figure to around £20,000 as part of his budget statement in November 2017, before making an eleventh-hour U-turn amid representation from business organisations. Instead, the Treasury has conducted a consultation on the proposed revision of the threshold during 2018, culminating in the Chancellor announcing ‘no change’ and actually fixing the current level until at least 2022.

Whilst there is little reasoning given for the polar change in thinking, other than claims to be small business friendly, it might be suggested that the Chancellor received significant protests from within in his own camp. HMRC has enough to do managing the introduction of Making Tax Digital for VAT and Brexit without adding another 800,000+ businesses into the VAT scheme in one fell swoop!

Watch this space for 2022 however, as by that time, MTD will be bedded in and will make the lowering of the threshold and subsequent calculation and collection of tax far easier.