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New VAT evasion rules promise to level playing field for small UK firms

Responding to the introduction of new rules to encourage online marketplaces to tackle Value Added Tax (VAT) evasion, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said: “No business, in any part of the world, should be gaining an unfair advantage in the UK by dodging tax. 
“The new rules introduced today promise to help level the playing field for small UK firms trading online. For too long, those who do the right thing have been allowed to lose out to firms that evade VAT.  

“Online marketplaces are vital to the success of thousands of small firms – often a natural complement to their high street shops. Like any good market organiser, these websites have a responsibility to ensure all traders are playing by the rules. 

“Equally, they need to ensure that in complying with the new rules set out today they don’t place any unnecessary admin burdens on small firms.”  
On the VAT threshold consultation announced by the Chancellor at his Spring Statement on Tuesday, Mike Cherry added:        
“VAT is the most time-consuming tax for small firms to handle. A small VAT-registered firm spends more than a working week a year complying with the tax on average. That’s time that should be spent running their firms and increasing productivity. 

“Suddenly dragging more small firms into the VAT regime is not the answer to the ‘thresholditis’ issue – where businesses close to the £85,000 turnover threshold for registration put the brakes on expansion. It’s good to see that the Chancellor’s two-year freeze on the threshold is still in place. 
“We welcome the fact that the VAT review launched this week considers pro-business solutions to the challenge of small firms bunching before the threshold, such as phasing-in VAT obligations for small firms as they start to bring in more than £85,000.”