Small Businesses: VAT

HM Treasury written question – answered on 15th January 2015.

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Photo of Caroline Lucas Caroline Lucas Green, Brighton, Pavilion

To ask Mr Chancellor of the Exchequer, what representations he has received on recent changes to the VAT regulation on (a) digital and (b) other small and micro businesses which fall below the existing VAT threshold in the UK; what estimate he has made of the likely additional costs to such businesses; if he will take steps to ensure that UK businesses below the VAT threshold in the UK are not negatively affected by such changes; and if he will make a statement.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

All EU businesses that make supplies covered by the new rules will have to account for VAT in the Member States in which their customers are located.

HMRC has provided extensive guidance to assist businesses including organising a Twitter Clinic and publishing answers to the main questions and has met with Enterprise Nation to hear the concerns of micro businesses.

HMRC has taken a number of steps to assist small businesses in particular. These include allowing businesses below the VAT registration threshold to register for VAT for their cross border sales only which will enable them to access the on-line Mini One Stop Shop which removes the need to register for VAT in other Member States.

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