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European Commission proposes standard VAT declaration

The EU has issued sweeping proposals that could see 2 million UK taxpayers suffer an increased administrative burden when completing their VAT returns.

The current UK VAT return contains 9 boxes but, the proposals from the EU could see this increase to 26 boxes (which will, with limited exceptions, require to be filed monthly) without any scrutiny or debate in the UK Parliament.

Each year some 20 million EU companies submit over 150 million VAT returns to the tax authorities and with reporting obligations varying in all 28 Member States, this makes it difficult for companies that do business in more than one Member State to comply with so many different rules. The EU has therefore called for a standardised VAT return applicable across all 28 Member States.

The tax authorities in each member state will now have to agree the purpose of the EU standardised VAT return, agree to its design and content, and ultimately introduce it in to each Member State by 1 January 2017.

The EU has been considering a standardised VAT return for several years and it surely is no coincidence that, since 1 October 2012, all VAT forms, including VAT returns, VAT registration forms and every other ‘form’ were removed from UK VAT legislation.

The removal of such forms from UK legislation therefore means that their content is no longer subject to the scrutiny, checks and balances of Parliament.

This could mean that in implementing EU proposals, UK businesses would be at the mercy of, at best, the decisions and recommendations of a Treasury Select Committee, at worst, the whims of HMRC all that is now required to increase the reporting contents of a UK VAT return is merely for changes to be ‘specified in a notice published by the Commissioners’.

This was posted in Bdaily's Members' News section by Baker Tilly .