Spring Statement 2019: VAT and Indirect Tax
VAT is one of the areas of taxation that is most likely to be impacted by the outcome of the Brexit discussions. The announcements today did not address any Brexit issues, but instead focused on simplification and preventing VAT avoidance.
VAT Partial Exemption and Capital Goods Scheme: Simplification
A call for evidence will commence on the potential simplification and improvement of the VAT Partial Exemption regime and the Capital Goods Scheme – ensuring they are as simple and efficient for taxpayers as possible. This follows the recommendations of the Office of Tax Simplification, which has looked in detail at the VAT system for possible areas for improvement.
Any simplification of the tax system is welcome. However, the outcome of many simplification projects is an increase in the tax collected, which is a risk for both these areas.
VAT administration in the Isle of Man – yachts and aircraft
Following the Paradise Papers allegations, the Isle of Man Government invited HM Treasury to review its VAT administration processes for the importation of aircraft and yachts.
HMRC has always kept a close eye on those who purchase yachts and aircraft through the Isle of Man and recover VAT on the purchase – so they may use this opportunity to drastically tighten up this regime.