Single Market threatens small firms

Remaining in the Single Market risks lower VAT threshold MPs have warned that thousands of SMEs will face more tax and red tape if European Union rules on VAT are allowed to continue after Brexit. New EU plans would see small and medium-sized enterprises forced to register for VAT when their turnover hits €85,000 (£76,700), below the current British threshold of £85,000. “A reduction in the VAT threshold would be a kick in the teeth for many of our smallest businesses. UK firms are already dealing with rising upfront costs and facing significant changes to their trading conditions in light of Brexit. Lowering the threshold could prove to be a tipping point for many small companies and entrepreneurs,” said Suren Thiru, head of economics at the British Chambers of Commerce. It is estimated that VAT registration takes a working week of time for a business. Chancellor Philip Hammond announced in his Budget that the threshold would stay at £85,000 until 2022 "to give small businesses certainty", to the relief of companies. But under the plans for a transition period after Brexit, the UK expects to follow EU rules until at least the end of 2020, and possibly until 2022. As a result, the lower EU threshold would override Britain's £85,000 cut-off for up to four years.