More support needed for SMEs with new online VAT

The Government must address the concerns of small businesses with the potential for a no-deal Brexit set to clash with the introduction of HMRC’s new online VAT system in April 2019, Making Tax Digital (MTD), according to the Association of Certified Chartered Accountants (ACCA).

In addition, currently companies in the EU are able to obtain VAT refunds from other member states through a straightforward single-market mechanism. This could cease in the case of a no-deal Brexit (29th March) and some member states, who would then be classified as third countries, may keep from refunding VAT to the UK as they currently do with US businesses and other third countries. In addition, a no-deal Brexit that identified the UK as a third country to the EU would require UK businesses’ IT systems to be changed in order to re-categorise them, creating additional complexity to VAT system.

This further complication to VAT submission would clash dramatically with the government’s new online tax system, due to come into effect just three days later on April 1st, creating new rules and classifications to be adhered to within just 72hrs. To prevent this clash creating disorganisation for small business owners, ACCA are calling for the government to be more precise than their current guidance released back in August and produce specific scenario plans for the various potential outcomes of a no-deal Brexit on VAT.

Chas Roy-Chowdhury, Head of Taxation, ACCA, stated, “This issue is of considerable concern for SMEs with many businesses reviewing how they will adhere to a new digital system MTD in April. A scenario whereby just three days prior to that, the UK might crash out of the European Union, with all the impacts that could have for those trading with the bloc would present unnecessary challenges for businesses. The House of Lords Economic Affairs Committee has called on the government to delay the roll out by and a year.  We are stating that the government must be specific with the various outcomes of a no-deal and provide detailed scenario planning guidelines for businesses to follow. A failure to do so would, indeed, require a delay to the introduction of the new online tax system until businesses have had time to address issues relating to a no deal Brexit.”

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About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 208,000 members and 503,000 students in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 104 offices and centres and more than 7,300 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

 

"We are stating that the government must be specific with the various outcomes of a no-deal and provide detailed scenario planning guidelines for businesses to follow"

Chas Roy-Chowdhury - ACCA's head of taxation