New European Union (EU) plans mean that VAT reporting obligations for UK businesses could soon treble in size as it seeks to reduce red tape.
From January 2017, the European Commission is keen to implement a standardised VAT return for all businesses; part of which will result in all companies needing to file monthly VAT returns.
At present, almost all UK firms file their VAT returns on a quarterly basis, meaning that businesses will go from having to complete four per year to 12 per year under the new ruling.
The reasoning behind a standardised VAT return for all businesses is to put an end to variations in formats and frequency of VAT reporting between each EU member state. The European Commission’s year-long consultation has put forward this new format which, it is hoped, will minimise the number of boxes requiring completion and streamline VAT reporting for businesses located in more than one country.
All businesses with a turnover above €2m (£1.7m) will be required to submit VAT returns on a monthly basis. The commission believes this ruling will save businesses of EU member states €15bn annually.
For most EU countries this ruling will not impact businesses too heavily, but the UK is one of only a few exceptions in currently obliging VAT registered companies to file on a quarterly basis.
Richard Asquith, head of tax, TMF Group, said: “A simplified VAT return for all of Europe is a sensible idea, but it will dramatically increase reporting frequencies, and therefore costs for all but the smallest of UK businesses.
“Aside from the extra manpower, companies will have to go through an extensive re-engineering of their IT and accounting systems.”
Whether you are just starting out or have been in business for a considerable length of time, TaxAssist Accountants can work with you to help you meet your VAT responsibilities now and in the future.
If you’d like to discuss how we can help prepare your VAT returns – either from your own bookkeeping records or we can take care of your record keeping and VAT return together – then please don’t hesitate to arrange your free initial consultation with your local TaxAssist Accountant today.
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