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Government ‘runs scared’ of radical VAT overhaulby
Neil Warren was disappointed with the Tax Day announcements about VAT and thinks that the government lacks the courage to make radical changes to the VAT system. It is time for ministers to be honest, he says.
There’s a great scene in the 1970s comedy classic Fawlty Towers where an irate guest asks hotel owner Sybil about the delay in the arrival of his fresh fruit salad. Sybil’s reply was very direct: “It’s on the way, sir, we’ve just opened the tin.”
To be honest, I was expecting some decent fresh fruit about VAT on Tax Day, which was trumpeted in advance by the government as being radical, ambitious, visionary. To be honest, as far as VAT is concerned, it was a complete let down – a few soggy peaches and out of date black bananas was as good as it got.
Turning back the clock to 2016, the Chancellor of the day Philip Hammond called upon the Office of Tax Simplification (OTS) to review the operation of VAT and make recommendations to simplify the system. The OTS did the job with great energy and vigour, making twenty-three recommendations in its final report in November 2017 to improve the system.
The report was received with gratitude and praise by Hammond but what has happened since then in terms of worthwhile changes? The answer is that the VAT registration threshold has been frozen at £85,000 and that will continue until at least 2024. Is freezing a threshold a radical change? The answer is ‘no’.
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