Registration threshold goes under the Treasury spotlight

The Treasury has launched a call for evidence on the VAT registration threshold as heralded in last year’s autumn Budget.

Currently £85 000 and set to remain at that level until April 2020 the move follows the Office of Tax Simplification’s report on VAT. This found that the relatively high level of the threshold had a distortionary impact on business growth because some small businesses deliberately limited their turnover to remain below £85 000.

The call for evidence is split into three chapters.

The first explores how the threshold might affect business growth.

The second looks at the burdens created by the VAT regime at the point of registration and why businesses might manage their turnover to avoid registering.

The third considers policy solutions based on international and domestic examples. The document refers to smoothing mechanisms proposed by the OTS were the threshold to be...