VAT simplification

VAT is showing its age according to the Office of Tax Simplification (OTS) in a review of the tax. What was meant to be a simple tax has become highly complex and has not kept pace with changes in society.

Angela Knight chair of the OTS board said: ‘This report presents an opportunity to start addressing the many anomalies of VAT. The tax is awash with layers of complexity reflecting both its evolution over the past 45 years and aspects of the purchase tax that VAT replaced. For small businesses this report will propose ways of simplifying many irritating administrative technicalities and kick off a debate about the registration threshold.’

Paul Morton OTS tax director said: ‘The report flags up the effects of the registration threshold how entry into the VAT system might be smoothed and many other areas where simplification...