Over half of UK SMEs still unprepared for 2015 VAT changes

A KPMG survey asked 156 decision makers in small UK businesses (those with under £10 million revenue) about awareness and preparation for the new EU VAT supply rules. These rules will take effect in January 2015 and the findings are that among 62% of small businesses in online retail, the telecoms and media industries feel unprepared.

Over half of UK SMEs still unprepared for 2015 VAT changes

A KPMG survey asked 156 decision makers in small UK businesses (those with under £10 million revenue) about awareness and preparation for the new EU VAT supply rules. These rules will take effect in January 2015 and the findings are that among 62% of small businesses in online retail, the telecoms and media industries feel unprepared.
The survey shows that 66% are not aware of the potential penalties related with non-compliance while 75% of respondents are considering raising their prices as a result of the new tax rules. The changes mean that VAT will no longer be charged based on where the business supplier is established but according to the EU country where the customer resides.

However, the firm calculates the changes should be good news for the UK economy which is set to benefit by around £300 million. This is because the VAT collected from UK customers will belong to the UK Treasury, rather than to the country where the supplier is based.
Amanda Tickel, a tax partner at KPMG in the UK states: "The majority of e-services bought by UK consumers are currently not subject to UK VAT as many of these e-services are currently sold from countries such as Luxembourg where the VAT rate is very low (around 15% and only 3% for e-books).

"This means the UK Treasury could benefit by around £300m from 2015, but someone has to lose out; either the suppliers of affected services will see significantly reduced profit or consumers will see increased prices as some of the additional VAT cost is forwarded."


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