Weather forecast from the Chancellor: Storm Clouds Gathering Again
Whilst his opening address started with comments of being on course for a budget surplus there was little clarity as he started his statement on when that would be. As a SME business there were certainly items that will appeal: - Corporation Tax cuts, Stamp Duty cuts on commercial property, higher personal allowances and tax thresholds and of course the much demanded business rates reductions. Much was made of his desire to “light the fires of enterprise” with the abolition of class 2 NIC and reduction in the Capital Gains Tax rates but if you put this against the backdrop of the wider economic downturn and the impact this will have on growth in the UK and across the globe perhaps its best to see these are reducing the cost of doing business in continuing difficult economic times rather than creating a drive for growth from increased sales.
We need to find out who’s out there to buy what we make/supply if we are to drive up growth and that’s difficult as the world economy remains weak.
Within the VAT arena the interesting comments was on the increased powers to stop overseas businesses trading through online marketplaces into the UK from undercutting UK based competitors through avoiding their responsibility to account for VAT on their sales fulfilled from stock held in the UK already. Initial review of the plans suggest it’s not as much a compulsory requirement to VAT register that will be forced on such overseas businesses operating in this way more a strengthening of HMRC powers to “direct” overseas businesses to be more VAT compliant.
What is a definite step change in this plan though is the inclusion of the online marketplace provider in the VAT compliance responsibilities of overseas businesses that trade through its portal – the online platform provider can face being served with a notice by HMRC that it will be “jointly and severally liable” for the VAT due on the future sales of its non-compliant customers. Businesses that operate as the “fulfilment houses” in terms of holding the stock and packaging them for dispatch will also face closer due diligence checks from HMRC in this area with a consultant paper published today.
With the challenges faced by small on line businesses in the UK it’ll be interesting to hear whether they feel these plans are strong enough to put them back on the same VAT footing as less scrupulous overseas suppliers trading from stock held in the UK.
The Chancellor was clearly concerned to make us as individual taxpayers feel there was some good news out there for us so freezes in alcohol and fuel duty rates may for many still mean we feel a little cheerier as the clouds gather.
Certainly for Wales the plans to halve the Severn Bridge Tolls in 2018 will be very welcome from all sectors - even if we are still paying VAT in that sum as well.
The consultation on the Sugar Levy will need a close read but great for Welsh Diary Farmers to see milk will be excluded from the regime – his comments on how the percentage of the levy passed through the Barnett formula to Wales would be spent was not missed so perhaps we’ll hear more on this at the Welsh Election hustings.
No sizeable change in the VAT registration threshold with “leaps” to £83,000 from the 1 April with Deregistration going to £81,000. These thresholds are some of the highest in the EU – arguably keeping many small businesses out of the VAT regime and I’m sure many micro businesses will argue long may that continue!