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Revenues from VAT soar over past decade

The latest VAT revenue statistics show that HMRC is now collecting record levels of this tax.

Over the course of the past ten years, the amount of VAT collected has risen from £70bn to £125bn. This represents 21% of the Treasury’s tax take.

In 2009/10 VAT represented just 18% of the total take. For the 2008/09 tax year the take was 17.6% of the total.

During the past 10 years, the rate of VAT has fluctuated. For 2008/09 the rate was 15%. That changed for the 2010/11 tax year to 18% and rose to 20% from the 2011/2012 tax year onward.

VAT revenues are close to overtaking National Insurance Contributions and becoming the government’s 2nd biggest source of tax revenue. However, the rise in VAT revenue has to some extent been countered by the fact that both Corporation and Capital Gains Tax revenue totals have fallen.

These figures are interesting, but it is the upcoming changes to the VAT system that is at the forefront of most business owners and Liverpool accountants’ minds. From April 2019, virtually all UK businesses that are VAT registered have to switch to keeping their VAT records digitally.

There is speculation that the level of VAT will be cut after Brexit as a way of stimulating consumer spending. Naturally, this change would be welcomed by many businesses. Whether this will actually happen remains to be seen.

What is known is that should the UK end up leaving the European Union without an agreement, changes to the rules and regulations will be necessary. However, this would only be necessary for transactions between UK companies and firms from EU member states.

Posted by Louise
January 30, 2019
HMRC

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