Huge increase in UK VAT registrations following new regulation implementation
The HMRC in the UK has reportedly received a huge upsurge in online VAT registration applications in 2016, after the introduction to hold online shops accountable for unpaid VAT to overseas vendors.
The new powers came into force in September this year, was intended to resolve the imbalanced benefit overseas retailers had over local retailers in the UK by not having to charge VAT for any online sales. The HMRC said that this particular regulation alone had lost the Treasury around £1B annually.
As per the new directive, The HMRC now has the power to make all overseas retailers appoint a UK-based VAT representative or pay a guarantee levy. Failure to comply means that the place they used to sell their goods could be accountable.
Mrs Jane Ellison, Financial Secretary for the Treasury stated:
“Having worked in the retail sector, I know that this is an extremely important time for online shops. The new tax powers will allow for an even playing field where everyone follows the same rules and pays the right amount of tax."
The new regulations are predicted to bring an additional £875M for the Treasury’s income by 2020.
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