Partner and our head of VAT, Veronica Donnelly, has warned that Scotland’s owner managed businesses are struggling to manage VAT, a problem that is costing Scotland’s economy millions of pounds of lost revenue.
Veronica is one of the UK’s leading experts in VAT and is urging Scotland’s owner managed businesses to place VAT at the top of the financial agenda, and do a thorough review of how they currently manage VAT.
She said: “Very few businesses have the systems and expertise to manage an increasingly complex and onerous tax. The VAT system now has so many variations for products, sectors and situations it is no wonder business owners are finding it difficult to manage. Poor VAT management can seriously limit investment, curtail expansion and restrict the ability of businesses to create employment opportunities, particularly for young people. In the worst case, failing to manage VAT efficiently can cause serious cash flow problems and threaten the viability of the business.
She added: “We are encouraging Scotland’s owner managed businesses to undertake a comprehensive review of VAT. It could save their companies a great deal of money and be the most cost-effective investment they have made in the business for many years.”
HMRC estimates that Scotland’s contribution to VAT receipts is nearly £10 billion for 2016-17, or 8.3% of all UK VAT receipts. The Office for National Statistics estimates that across the UK, VAT will raise over £120 billion in 2016-17, or 16.9% of all receipts, equivalent to £4500 per household. The estimate for 2017-18 is nearly £126 billion. VAT is the third largest source of government revenue after income tax and national insurance.
VAT was launched in the UK on 1st April 1973, three months after the UK joined the European Union on 1st January and replaced the Purchase Tax which had been the principal tax on luxury goods since 1940.
If you are concerned about VAT and require guidance use this link to arrange a call back and a member of our team will be in touch.
This information should not be regarded as financial advice. This is based on our understanding in April 2018. Laws and tax rules may change in the future. Campbell Dallas is not responsible for content contained on 3rd party sites.