Budget 2017: Government announces plans to crack down on VAT evasion

Helen Cahill
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More and more UK consumers are buying their goods online (Source: Getty)

The government is cracking down on overseas traders that avoid paying UK VAT.

In the Spring Budget today the Treasury has said that it will be putting in place measures to stop traders from undercutting UK businesses online by charging less and not paying tax on UK sales.

To draw up a new collection method for VAT, the government will call for evidence on how best to tax online sales, given that more and more UK consumers are buying their goods online.

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At the moment, it is aiming for a so-called "split payment" model, which uses technology that allows the Exchequer to charge VAT on online sales as soon as a UK consumer makes a purchase.

"This is the next step in tackling the non-payment of VAT by some overseas traders selling goods online to UK consumers," the government said in its Spring Budget today.

As another part of its crackdown on tax avoidance, the government said today that it will put in place a new penalty scheme for those who enable tax avoidance. The new scheme will come into effect in July.

Kate Ison, senior associate at international law firm Berwin Leighton Paisner, said:

Tackling tax evasion and avoidance remains high on the government’s agenda. It is likely that HMRC will continue to take an aggressive approach towards challenging tax avoidance, as a way of reducing the tax gap. We can expect this to result in increased litigation in the courts.

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