A good article as always from Neil Warren and shows that he's actually read the OTS report, unlike Sift's business editor who came up with the headline "VAT cut proposal stokes MTD fears for SMEs".
The earlier piece said that "the blockbuster recommendation is to drastically lower the VAT threshold from its current level of £85,000 (one of the highest in the world)".
It then said "the report doesn't make an outright recommendation .... " - OK so which is it?
"The possible options of a lower, higher or same threshold" - wow, that's brilliant.
Just as brilliant as their recommendations on IR35 some years ago now - amend it, leave it the same or abolish it.
The OTS - the biggest gravy train in recent times.
Maybe they've done the maths and decided that to purchase a state pension for £148.20 per year is a bargain for the taxpayer.
I must be atypical of small practices inasmuch as I never have problems with fees, pitching them as I do somewhere between the cut-price brigade (who likely don't have the requisite technical expertise) and the high street (higher overheads) practices.
I must confess that I'm not clear how the hypothetical conversation would go.
Prospective client: "I'm a plumber turning over £55K. How much would you charge to keep me legal"?
Me: "How much would you like to pay"?
Prospective client: "Well £100 per year would suit me fine".
Me: (Gulp) "Er, I don't think I could manage that".
Prospective client: "Well, you did ask".
An excellent article but "HMRC staff are trained to look for a covering letter"? If my experience is anything to go by the covering letter will soon become separated from the return and lost. My advice is to number the covering letter "1 of 2" and the return "2 of 2". At least these trained staff will then be unable to deny receiving it.
I should have added that I wonder if HMRC trousered the output tax from the suppliers or whether they even bothered to check the position.
On the face of it this looks a harsh judgment if the taxpayer had valid VAT invoices. However I suspect that the devil is in the detail and wonder if for example the invoices were addressed to the taxpayer. If not I suppose they could be used time and again by anybody who dealt in cash on occasions. It looks as if my advice to clients that a valid VAT invoice is always needed to reclaim input tax is only OK up to a point.
I see software companies are still trying to second guess what will actually happen and recoup some of their losses incurred thus far.
Love the last paragraph.
Without wishing to blow my own trumpet and sounding like Jeremy Clarkson I'm pleased to say that I had a hunch that this idea would collapse or need a lot more planning. Consequently I haven't forewarned any client, spent any money on new software nor on any training.
I also believe that the software companies were hoping to make a killing and were probably cosying up to HMRC in the process thereby giving them false encouragement with their madcap ideas.