This briefing contains recent changes on VAT issues that may affect your business.
VAT Registration and De-registration Limits
From 1 April 2017, the UK’s VAT registration threshold was increased from £83,000 to £85,000, with the de-registration threshold also rising from £81,000 to £83,000.
Making Tax Digital (“MTD”)
This is the UK Government’s ambitious plan to require all businesses to submit information digitally to HM Revenue & Customs (“HMRC”) directly from their accounting software every quarter. The Government will introduce legislation to require a business trading over the VAT registration threshold to retain its records digitally (i.e. all sales and purchase) and provide information to HMRC at least quarterly commencing in April 2019.
Changes to fees charged by eBay
From 1 August 2017 fees charged by eBay to UK customers (sellers) have become subject to VAT. This results from a change in its contractual relationship with its customers. Previously, customers contracted with eBay Sarl, no VAT was charged to business sellers in the UK under the intra-EU place of supply rules. As fees are now charged by eBay UK Limited, VAT at 20% will be added. This change should not adversely affect most VAT registered sellers as they will simply be able to recover the VAT as input tax via their UK VAT returns. Unregistered sellers those operating under the VAT Flat Rate Scheme will now be charged VAT by eBay that they won’t be able to recover.