INNOCENT SMALL BUSINESSES MAY SUFFER FROM CRACKDOWN ON VAT ABUSE
February 20th, 2017.



The Chartered Institute of Taxation (CIOT) is concerned that HMRC’s new measure to crackdown on abuse of a VAT simplification scheme may be ineffective and have unwelcome consequences for tax compliant small businesses.


The CIOT accepts that the Government must tackle abuse of the VAT Flat Rate Scheme (FRS) but believes that changes to the proposed measure are needed, to avoid excessive collateral damage to compliant small traders.

Peter Dylewski, chairman of the CIOT’s Indirect Taxes Sub-committee, says, ‘Targeted action against abuse of the FRS, which is masterminded by a relatively small number of businesses, is preferable to such wholesale changes. We are concerned that HMRC has significantly underestimated the collateral impact of these changes, both in terms of the number of businesses affected and the financial impact.’

The FRS is a simplification measure for small businesses, which enables them to pay to HMRC a fixed rate of VAT, that is determined by their type of business, rather than keep detailed records of input and output VAT. HMRC estimates that 411,000 businesses use FRS.


For the full story at smallbusiness.co.uk CLICK HERE.