Do you think your small business can get along fine without the help of your local accountant?
Are you reasonably confident preparing and filing your quarterly VAT returns? Well, things may be about to change if the European Union gets its way, and unless you’re supremely confident in your administrative and accounting capabilities, things could be about to get extremely complicated.
Proposed EU laws could mean that filing VAT returns for small businesses could become extremely complex and time-consuming.
Experts are warning that should these proposed VAT reporting changes come into effect, the reporting obligations on UK businesses could triple, even though the stated aim of the proposed changes is to reduce the amount of red tape and free up business to spend more time doing what they do best.
What changes are proposed?
From January 2017, the European Commission wants to implement a standardised VAT return for all businesses. There’s nothing wrong in that per se, but the upshot will potentially be that companies will need to file monthly VAT returns. Currently, almost all UK firms file their VAT returns on a quarterly basis. If the changes go ahead businesses will have to file 12 returns a year.
Why make these changes when the system seems to be working reasonably well?
The reasoning behind a standardised VAT return for all businesses is to put an end to variations in formats and frequency of VAT reporting between each EU member state. The European Commission’s year-long consultation has put forward this new format which, it is hoped, will minimise the number of boxes requiring completion and streamline VAT reporting for those businesses which are located in more than one country.
Who will be affected?
All businesses with a turnover above €2m (£1.7m) will be required to submit VAT returns on a monthly basis. The commission believes this ruling could potentially save businesses of EU member states €15bn annually. Such changes may not impact too heavily on most European countries; however, the UK is one of only a few countries which currently obliges VAT-registered companies to file on a quarterly basis.
What do the experts think of the proposed changes?
Richard Asquith, head of tax, TMF Group, said:
“A simplified VAT return for all of Europe is a sensible idea, but it will dramatically increase reporting frequencies, and therefore costs for all but the smallest of UK businesses. [However] Aside from the extra manpower, companies will have to go through an extensive re-engineering of their IT and accounting systems.”
Whether you’re just starting out or have been in business for many years, Steven Glicher accountants can help businesses meet VAT responsibilities now and in the future. If you’d like to discuss how we can help prepare your VAT returns – either from your ownrecords or we can take care of your record keeping and VAT return together – then contact Steven Glicher accountants on 0161 485 8007 for further information.