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8 | Consultations
It is important the members of the OECD’s Inclusive
Framework make progress in developing multilateral
solutions. To assist this process, the paper sets out
some of the government’s initial considerations on
what this could include.
As set out at Autumn Budget 2017, in the absence
of such reform, there is a need to consider interim
measures such as revenue-based taxes.
The paper explores some of the important
considerations regarding the scope and design
of an interim measure, and the steps that could
be taken to ensure it is well targeted and protects
startups and growth companies.
The government still thinks there are beneits to
implementing an interim measure on a multilateral
basis and it intends to work closely with the EU and
international partners on this issue.
VAT REGISTRATION THRESHOLD
The government is concerned that the current
design of the VAT registration threshold may be
disincentivising small businesses from growing
their business and improving productivity.
The chancellor has previously reported that the
UK had the highest threshold in the OECD and the
government had concerns about the cliff-edge
nature of the threshold.
In general terms, if the taxable turnover of a
business in a 12-month period exceeds the
threshold (currently £85,000 until March 2020) the
business must register and account for VAT.
There is growing evidence that the cliff-edge nature
of the VAT threshold acts as a disincentive for small
business owners who want to expand. This call for
evidence and review is split into three parts:
•
how the threshold might currently affect
business growth
•
the burdens created by the VAT regime at the
point of registration, and why businesses might
manage their turnover to avoid registering
•
the possible policy solutions, based on
international and domestic examples.