06 Feb 2018
Data published by HMRC has revealed that VAT now accounts for 21% of the Revenue’s overall tax take.
The latest figures show that VAT receipts total £124 billion – a 16% rise when compared to figures recorded during the 2008 recession.
However, separate research published by online business finance supermarket Funding Options found that UK businesses owe £2.5 billion in overdue VAT, with many companies ‘struggling to find the cash to pay their bills’.
Late payments have a detrimental effect on firms’ cashflow – often leaving businesses ‘unable to meet their tax liabilities’, said Funding Options.
Commenting on the issue, Conrad Ford, CEO of Funding Options, said: ‘Too many small businesses are in real danger of collapsing under the weight of their VAT bills.’
In addition, the government recently published its Taxation (Cross-Border Trade) Bill 2017-19, within which it outlined proposals to change how VAT is charged post-Brexit. Under the proposals, UK businesses could be required to pay VAT upfront, in cash to HMRC.
The British Retail Consortium (BRC) warned the government that such changes to VAT could create ‘additional cashflow burdens’ for UK firms.
As your accountants, we can help you with your VAT obligations. Please contact us for assistance.