UK BUSINESSES’ VAT reporting obligations could be set to treble under EU plans as it aims to cut red tape.
From January 2017, the European Commission is looking to introduce a standard VAT return for all businesses, part of which will require requiring all companies to file monthly VAT returns. Currently, almost all UK businesses file their VAT returns on a quarterly basis – so will have to complete 12 tax filings per year instead of the current four.
One of the most common complaints of companies doing business across Europe is the variations in formats and frequency of VAT reporting between each member state.
To overcome this, after a year-long consultation, the commission has put forward a new format , which, it is hoped, will reduce the number of boxes requiring completion and help businesses completing returns in more than one country. All business with a turnover above €2m (£1.7m) will have to submit VAT returns on a monthly basis.
The commission estimates this will save EU businesses €15bn annually.
Whilst most EU countries currently require monthly filings, the UK is one of the few exceptions in obliging VAT registered companies to file on a quarterly basis.
TMF Group head of tax Richard Asquith 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.”
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