GOVERNMENT CONSULTATIONS

Updated 11th July 2018.

 

PASC UK has fed back to the Government on all the recent consultations as we seek to use this opportunity to guide Government policy on several keys areas: a reduced rate of VAT for Tourism, how Inheritance Tax relief should be reinstated for professional holiday letting businesses, a proper discussion on the VAT threshold and its impacts, as well as feeding back on the impact that the unregulated ‘sharing economy’ is having. Details of the Government Consultations are below.

VAT REDUCTION FOR TOURISM CONSULTATION

 

The demands by the DUP in Northern Ireland for a reduction in Tourism Tax led to a Government Consultation into the impact of VAT and Air Passenger Duty on tourism. This is major step forward and we took the opportunity of pushing for change here. The evidence is available, one of the PASC Board members, Graham Wason, is the founder of the Cut Tourism VAT campaign and real fiscal evidence was provided as part of this consultation.

 

The Consultation closed on the 5th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Facebook.

 

CONSULTATION INTO THE VAT THRESHOLD

 

A further consultation was also responded to on the issue of the level of the VAT threshold. The consultation looked at further simplification options, and in particular at why businesses choose not to grow beyond the current £85,000 threshold. The paper looked at three options, one a harmonised EU approach, one involving administrative changes and one that involves a smoothing of the cliff-edge currently experienced at the threshold. This offered us a significant opportunity to make our case. We trade B2C (Business to consumer) so the VAT element is invisible to our customers, yet it is a huge proportion of the price. It may of course be a simpler solution for Tourism Businesses to introduce a 5% VAT rate for businesses offering visitor accommodation. Then, whatever the threshold, the ‘cliff-face’ is greatly lessened, and tourism is given a major boost, thereby also boosting the rest of the economy.

  

The Consultation closed on the 5th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Facebook.

 

 

 

COLLECTING TAX ON INCOME THROUGH ONLINE PLATFORMS

 

This was a very welcome consultation. We have been voicing our concerns that those that advertise through the ‘sharing economy’ platforms, primarily through the online travel agents (OTA’s) such as AirBnB are not only not meeting the same level of regulation that professional operators do, but that they are not declaring the income either.

 

The lights have finally come on in the Treasury and in their own words:

 

“The Treasury said its research showed that more than half of people using “sharing sites” did not regard the income they made as taxable. It claimed that the proposed measures would make it easier for people to fulfil their tax obligations while cracking down on a “dishonest minority”.

 

It’s quite interesting that in that simple statement they say that more than half don’t think they owe any tax, but that the measures are only focussed on a dishonest minority. We need them to focus on ALL transactions. Why should a booking via an OTA have any less tax liability than through other channels?

 

This Consultation will fit in nicely with the feedback from the APPG (All Party Parliamentary Group) into the sharing economy that we gave Oral Evidence to. We should feel reasonably optimistic that the Government is unlikely to find through this consultation that income earned through these platforms is not taxable.

  

The Consultation closed on the 8th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Facebook.

INHERITANCE TAX REVIEW CALL FOR EVIDENCE AND SURVEY

 

This is also a very welcome breakthrough. Albeit that it is a consultation launched by the OTS (Office of Tax Simplification) so not as weighty as the above consultations.

 

PASC lobbies HMRC for a fairer definition of business in a self-catering context. We believe that if a business meets the following criteria, it should still be able to apply IHT relief, as was the case before the change:

 

  • If the business is registered for VAT and pays HMRC VAT

  • If the business is registered for Business Rates and pays Business Rates

  • If the business has full time employee/s

  • If the business is run for the basis of profit and pays the business tax relevant to its company structure, e.g. Corporation Tax or Income Tax etc.

  • If the Business meets its responsibilities under current legislation. Gas, water testing, fire safety, access statements etc.

 

We believe that any fair review would say that any business meeting the above criteria is a business by definition.

 

The Consultation closed on the 5th June 2018. As soon as any responses are available from Government, updates will be posted both here and on Facebook.

INTERIM FEEDBACK FROM THE TOURISM APPG INTO THE ‘SHARING ECONOMY’

 

This is part of the Tourism APPG’s (All Party Parliamentary Group) inquiry into how to maximise the tourism-related benefits of sharing economy accommodation while, at the same time, reducing adverse outcomes. This report has six interim conclusions, and we broadly welcome them, particularly the phrase ‘level playing field.

 

1. As a principle, all businesses offering accommodation in the visitor economy, whether existing ones or new ones enabled by the sharing economy and its platforms, should compete on a level playing field

2. There is an urgent need to independently clarify and codify the adequacy of the various 'checklists' or other security assurances being offered by sharing economy platforms

3. Far more attention needs to be given, and evidence sought, as to the experiences of, and impact on, those living in close proximity, either as physical neighbours, or in the neighbourhoods of, properties being used regularly by sharing economy businesses.

4. The implications of local enforcement agencies not having adequate resources to carry out adequate safety inspections of sharing economy businesses due to severe budgetary restrictions must be grasped - not least by Government

5. The Inquiry received strong arguments for a “soft touch” statutory registration scheme for all visitor accommodation that might operate via an online implied consent registration process and will consider this further.

6. There are cities and large towns outside London where variable limits on the use of residential accommodation for tourism (either greater or lower than 90 days) could be introduced dependent on local factors and experience.

 

The Consultation closed on the 27th April 2018. The final report will be produced by the end of July. As soon as any responses are available from Government, updates will be posted both here and on Facebook.

PASC UK Ltd

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Chapel Street, Honiton
Devon  EX14 1EU

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