VAT registration threshold

The VAT registration and deregistration thresholds will be increased in line with inflation with effect from 1 April 2017 to £85,000 and £83,000 respectively.

VAT: ‘split payments’ model

As announced at Budget 2016, the government is considering alternative methods of collecting VAT. This is in addition to the measures it has already introduced to tackle the problem of overseas businesses selling goods to UK consumers via online marketplaces without paying VAT. At Spring Budget 2017, the government confirmed that it will consult on the case for a new VAT collection mechanism for online sales. This would harness technology to allow VAT to be extracted directly from transactions at the point of purchase. This type of model is often referred to as ‘split payment’.

VAT: use and enjoyment provisions for business to consumer mobile phone services

The government has announced that the VAT use and enjoyment provision for mobile phone services provided to consumers is to be removed. The measure will bring those services used outside the EU within the scope of the tax. It will also ensure mobile phone companies can’t use the inconsistency to avoid UK VAT. This will bring UK VAT rules in line with the internationally agreed approach.

VAT: fraud in the provision of labour in the construction sector

A consultation is to be launched on a range of policy options to combat supply chain fraud in supplies of labour within the construction sector. Options include a VAT reverse charge mechanism so the recipient accounts for VAT. It will also consider other changes including to the qualifying criteria for gross payment status within the Construction Industry Scheme.

Customs examination powers

Current customs and excise powers of inspection are to be extended enabling officers to examine goods away from approved premises such as airports and ports, to search goods liable for forfeiture and open or unpack any container. This will take effect from Royal Assent of the Finance Bill 2017.

Fulfilment House Due Diligence Scheme

The government will introduce a new Fulfilment House Due Diligence Scheme from 1 April 2018, which is designed to ensure that fulfilment houses play their part in tackling VAT abuse by some overseas businesses selling goods via online marketplaces. Broadly, fulfilment businesses in the UK will have to register with HMRC, keep certain records and carry out robust due diligence checks on their overseas customers. HMRC will publish the register to allow businesses to check whether they are dealing with compliant fulfilment businesses.

Existing fulfilment house businesses should apply to register with HMRC by 30 June 2018. New fulfilment house businesses, established after 30 June 2018, will need to apply to register 45 calendar days in advance of the date they intend to commence trading.

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