In a new report, the Office of Tax Simplification (OTS) has outlined a range of measures intended to help simplify VAT.
The OTS stated that the tax has become ‘highly complex’, and has ‘not kept pace with changes in society’.
As such, in its report, the OTS has recommended 23 measures intended to simplify VAT. These include examining the current approach to the level and design of the VAT registration threshold; carrying out a comprehensive review of the reduced rate, zero-rate and exemption schedules; and reviewing the current requirements for record-keeping and the audit trail for options to tax.
Commenting on the recommendations, 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 last 45 years and aspects of the Purchase Tax that VAT replaced.’
Meanwhile, the Federation of Small Businesses (FSB) welcomed the report. Mike Cherry, its National Chairman, stated: ‘Small business owners spend a huge number of hours a year complying with their VAT obligations – hours that should be spent running their firms. We welcome the report’s flagging of ‘extraordinary anomalies’ within the system and its drive towards improving VAT guidance and reducing the massive admin burdens associated with the tax.’
The report can be read in full here.