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VAT changes may take a page from the French

The UK based group known as the Association of Tax Technicians would like Value Added Tax to change to a model similar to the one used in France.

VAT reporting has always been a pain in the arse for most people, but sole traders such as freelancers and contractors have always had a devil of a time with it. The ATT knows this and has come forward with the proposal to change VAT after Her Majesty’s Revenue & Customs opened a consultation on the upcoming VAT changes in April of next year and how firms can ready themselves for those changes.

Next year, changes fundamentally for businesses if they offer discounts for prompt payment. Essentially it’s getting more complicated for businesses and HMRC if customers choose to claim a prompt payment discount, and also if they decline it as well.

This is, of course, completely overly complex and should be thrown out and the whole thing should be started over again from scratch if you ask me. However, policymakers don’t like listening to anything that I have to say so we’re going to get whatever it is we get. Hopefully the ATT’s idea for changing the system slightly to make it easier on businesses by not having to issue nearly as many credit notes in the future – and it turns out that’s how the French have been doing it for years now.

Now I’m not necessarily a Francophone, as there’s a lot going on across the Channel that I’m not particularly fond of, but I have to give the French credit when it’s due. Altering VAT in this way is simply brilliant in that it reduces the amount of work for businesses by a sizable margin, and this can truly help even more when you’re a sole trader because you’re the only one doing all the work. Not everyone of us can afford to take on a contractor accountant to handle the financial details of their work-at-home business after all, so if you’re working out your home office and you’re billing customers yourself the French method should be a huge improvement if you ask me.

Hopefully HMRC will listen to the ATT and we’ll actually see some changes in policy before the April 2015 deadline. Knowing the Government though I wouldn’t hold my breath.

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