Consultation on alternative methods of VAT payment to open doors to a more progressive transaction tax

The Government has today announced a consultation looking at alternative methods of VAT collection – what it calls ‘split payment’ where VAT is collected by the payment card issuing company or payment company. It is part of the Government’s efforts to more effectively collect VAT due on sales in the UK from global technology companies.

The Government has today announced a consultation looking at alternative methods of VAT collection – what it calls ‘split payment’ where VAT is collected by the payment card issuing company or payment company. It is part of the Government’s efforts to more effectively collect VAT due on sales in the UK from global technology companies.

Its proposals are made possible by new and emerging technology that may, says accountants and business advisers Kreston Reeves, open the way for a completely different and more progressive approach to collecting taxes.

Richard Spofforth said: “This consultation proposes, amongst other things, that VAT be collected in real time. It says that technology already exists to make this possible, and that opens some really interesting possible future changes to the way all tax is collected.

If government believes it can do this with VAT, why not with other taxes. And could this technology pave the way for a future and more progressive transaction tax. It is difficult to see why not. This could be a really simple method of collecting a new tax on the likes of Google, Amazon and Apple outside of their complex international tax structures. This would help level the playing field between big global brands and our home-grown e-tailers.

Whilst not announced in the Chancellor’s slimmed down Spring Statement, this really is a landmark move that may have exciting and long-term implications.”