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In view of the MTD project, there must be a possibility that the VAT threshold will be reduced eventually to bring most businesses into the VAT net.
In view of the MTD project, there must be a possibility that the VAT threshold will be reduced eventually to bring most businesses into the VAT net.
Agreed and maybe freezing the threshold is the first step to a later reduction...or am I just an old cynic?
Neil, Excellent article and a very interesting slant on the effects of freezing of the HMRC VAT registration threshold.
If his turnover is standing still then he has other troubles than just worrying about whether to register for VAT...
There are many other cost pressures on his business and it's dangerous to assume he could raise his prices at all, never mind by inflation.
Turnover is vanity. He should be looking to expand the business, looking at his costs, etc. and what his bottom line his and how to increase it.
Hiring out his unit to another caterer could be a fast way to have it damaged or to damage his own reputation if that caterer doesn't operate to his own high standards- as it will still have all his branding on it. Wouldn't say that would be a great idea for £750.
And why should a slightly more successful business turning over, say £100k per annum have to compete with John who is getting away with not having to charge VAT by virtue of some arbitrary threshold? No level playing field there.
VAT threshold needs to be a lot lower, around the higher rate tax threshold. This would provide a much leveller playing field than the current distortions of the high threshold.
As for John, he needs to consider where he wants to take his business- maybe the solution is looking for slightly lower turnover but higher margins, or looking at his work/life balance and deciding playing a round of golf a week is the solution for him.
C'mon - we all know what will happen in reality given that John's sales will be entirely in cash! Freezing the VAT threshold may simply give rise to a larger black economy.
Another option is of course to just stop trading for a week/month and go on holiday. There are many guest houses down hear in the south west that take that option.