Saturday, December 28, 2019

VAT will have more ‘leeway’ and ‘flexibility’ when we leave EU, says tax expert

Campaign Manager for the TaxPayers’ Alliance, Duncan Simpson, spoke to about the “freedom” that the UK will have to control VAT rates post-Brexit. The standard rate of VAT in the UK is currently 20 percent and this is the rate charged on most purchases. Reduced rate VAT is charged on sanitary products, energy-saving measures and children’s car seats and is charged at five percent. Mr Simpson called for a “simplification” of the system and an “eventual lowering” from the 20 percent rate.

He told “Relatively speaking, VAT is probably the main tax on consumption which will have more leeway when we leave the EU.

“For example, there are certain elements of how VAT is instituted at the moment, particularly on domestic heating prices.

“There’s a different band at the moment compared to the standard 20 percent rate which has to be applied.

“But, relatively speaking, I think it’s important, particularly with VAT, that a lot of the exemptions and lower rates and zero-rated bands for a lot of products should be eliminated.”

Mr Simpson continued: “What should be the priority for VAT is the eventual lowering of the rate from 20 percent, but a simplification of the system.

“For example, the castigating saga from George Osbourne about six or seven years ago.

“There are these really weird iniquities around how VAT is charged.

“For example, Jaffa Cakes don’t have VAT, but other types of biscuits do. But not all chocolate biscuits have the standard rate of VAT. There’s no reasonable explanation as to why that’s the case.”

The tax campaigner added: “If you look through the guidance from HMRC, it’s a massive amount of categorisation and de-categorisation.

“So yes there will be a degree of more flexibility on how VAT can be levied in the UK once we leave the EU

“But the priority is for any government, whether we would have been staying in the EU or not, should be a focus on simplification rather than a further salami-slicing approach of how it’s implemented.”

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Mr Simpson also spoke about the “very unpopular” inheritance tax.

Inheritance Tax is paid when a person’s estate is worth more than a certain amount when they die. A YouGov poll found that 59 percent of British people thought it was “unfair”.

The tax expert agreed with the poll’s assessment, adding that it was “very cruel” to grieving families and could only be resolved by being abolished.

He told “I think it’s fundamentally a very unfair tax. You’re demanding of families who are, one, having an understandably very difficult time grieving for relatives.

“But additionally are already dealing with a lot of elements of bureaucracy and changes which the government are forcing upon them, such as probate, arranging land registry fees, death certificates, various items which have to be dealt with upon the death of a loved one, and then, lo and behold, there’s this rather large inheritance tax bill.”

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