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EU proposals to standardise VAT returns across Europe would cause a seismic shift in the management of UK businesses, DSH Chartered Accountants & Business Advisors has warned.
At the end of February, the EU's Commissioner for Taxation, Algirdas Šemeta, announced that the European Parliament had given strong support to the introduction of an EU-wide standard VAT return.
Commissioner Šemeta said the aim of the proposal was to cut red tape, simplify VAT reporting and reduce business compliance costs by up to €15bn a year, and described the proposal as both growth and business-friendly.
However, Martin Dane, Head of VAT and Indirect Taxes at DSH, warned the proposed changes would have serious implications for UK businesses.
"One of the key proposals is that the standard VAT accounting period would become monthly, rather than quarterly," he said.
"Since 1973, UK businesses have geared their VAT accounting and business cash-flow to function on a quarterly basis. Moving to a mandatory monthly submission and payment basis would represent a seismic shift.
"There is a significant risk that, for most UK businesses, the EU Commission's proposal will have the opposite effect to that which the Commissioner is claiming.
"Four returns and payments per year will become 12 and the flexibility for a business to manage its VAT cash flow will be dramatically diminished. This is in no sense business and growth-friendly."
Martin added that while the changes are a proposal at this stage, the endorsement of the European Parliament means they have cleared a major hurdle and it is only a matter of time before they become mandatory.
To find out more about DSH Chartered Accountants & Business Advisors, visit www.dsh.co.uk or call 01622 690666.
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