Home » EY Future of VAT in the UK survey

EY Future of VAT in the UK survey

EY has published a new survey as part of its Future of VAT project. Full details are reproduced below, but charities and advisers should respond directly to the survey here, before the 28 January 2022 deadline. You can watch a video of EY discussing the issue with CTG here.

Future of VAT in the UK survey

In March 2021, we launched our Future of VAT in the UK campaign. During Spring 2021, we gathered information on current experiences and views on the future of the UK VAT regime from a wide range of businesses and organisations. We did this through the survey, meetings, workshops and other events.

From this work, we identified four clear themes which are summarised in our interim report published in July 2021. We committed to explore the following areas in more detail, along with specific technical areas which are identified through this work:

  • UK VAT as a digital tax
  • VAT as a driver for change, with a focus on sustainability
  • The alignment of the UK VAT regime to other indirect tax systems across the world
  • The HMRC relationship, including communication

In this deep dive survey, we would like to hear your views on three of these areas:

  1. UK VAT as a digital tax
  2. the alignment of the UK VAT system with other regimes
  3. the HMRC relationship.

VAT as a driver for change, with a focus on sustainability will be looked into as a separate workflow. Recognising that some of the questions are very specific to particular areas of the tax and that you may only want to respond to specific parts of this survey, we have kept responses as ‘optional’ wherever possible so you can choose the level of detail you provide in your responses. Your perspective will be invaluable in helping to shape our work on these key areas for the Future of VAT in the UK.

The future of UK VAT as a digital tax

Q1. Responses to our initial survey indicated that the profile of VAT in many organisations has increased in recent years. Is this your experience? Please provide your additional comments in the box below.

  • Yes
  • To an extent
  • No
  • I do not wish to respond/does not apply

Q2. Relative to today, how important do you expect VAT to be for your board in five years’ time? Please provide your additional comments in the box below.

  • Extremely important
  • Very important
  • Moderately important
  • Slightly important
  • Not at all important
  • I do not wish to respond/does not apply

Q3. Indicate your satisfaction with the roll out of Making Tax Digital (MTD) for VAT by HMRC. Please provide your additional comments in the box below.

  • Extremely satisfied
  • Somewhat satisfied
  • Neither satisfied nor dissatisfied
  • Somewhat dissatisfied
  • Extremely dissatisfied
  • I do not wish to respond/does not apply

Q4. Are your business stakeholders clear on HMRC’s plans for the future of MTD in the UK? If this is unclear, please provide your additional comments in the box below.

  • Definitely yes
  • Probably yes
  • Might or might not
  • Probably not
  • Definitely not
  • I do not wish to respond/does not apply

Q5. Are you satisfied that your MTD for VAT solution(s) are “future proof” should HMRC seek to make changes to the requirements in the future. For example, is your current solution able to support with the provision of transactional data to HMRC on a regular basis? Please provide your additional comments in the box below.

  • Extremely satisfied
  • Somewhat satisfied
  • Neither satisfied nor dissatisfied
  • Somewhat dissatisfied
  • Extremely dissatisfied
  • I do not wish to respond/does not apply

Q6. What have been your top three challenges in achieving compliance with MTD for VAT?

  • Challenge one
  • Challenge two
  • Challenge three

Q7. HMRC has a vision for real-time reporting for VAT by 2030. What is your current understanding of how this will operate? 

Q8. To what extent has HMRC’s intended move towards more real-time reporting impacted the VAT profile with the senior leadership in your business?

Q9. What do you think will be the biggest challenge for the UK implementing real-time reporting for VAT by 2030? Please rank in order of difficulty by dragging the most difficult option to the top and dragging the least difficult to the bottom.

  • Data quality
  • Securing appropriate budget to ensure compliance
  • Existing ERP/IT infrastructure challenges
  • Competing demands for real-time data in other countries and limited resource
  • Other competing demands and compliance obligations (not VAT)
  • Other (please specify)

Q10. If you were asked to support HMRC in moving toward real-time reporting for VAT in the UK, how would you suggest this is achieved? Are there any methods you would recommend, or discourage?

Q11. HMRC is currently considering the application of split payments for VAT. What other new technologies would you like HMRC to consider in the context of the VAT system and the effective collection of tax?

To consider the opportunities and risks related to the UK’s alignment to global indirect tax regimes, we would be grateful if you could respond to as many questions possible in this section.

Q12. Please list any features of overseas VAT/indirect tax systems that could enhance your business model if they were to be adopted in the UK.

Q13. If the UK diverged from other VAT systems, e.g., the EU, what would be the biggest risk and opportunity for your business?

Q14. Please describe the most significant differences in data and record-keeping requirements between the UK and other countries in which your business is registered?

As part of our work on this deep-dive, one issue we are considering is how misalignment could act as a barrier to export growth and the UK government’s vision for “Global Britain”. Please answer the questions below to help us explore this further.

Q15. Please list the elements of the UK VAT system that could restrict your capacity to export goods.

Q16. Please list the elements of the UK VAT system that could restrict your capacity to export services.

Q17. How could the UK VAT system be changed to increase your capacity to export?

Q18. Do you make exempt supplies of services? If so, what are the exemptions and how are they treated for VAT purposes when supplied overseas?

Q19. [Missing?]

HMRC relationship: throughout our work in 2021, businesses consistently identified the HMRC relationship, including communication, clarity and collaborative policy development, as a key theme and as a result we are exploring this further. This is also an area that HMRC has been exploring and HMRC published a response to the review of tax administration for large businesses on 30 November 2021. 

Q20. Our Future of VAT findings have identified seven potential improvements for the relationship with HMRC. Please rank these solutions in order of importance for you and your business by dragging the most important option to the top and dragging the least important to the bottom.

  • Online account/portal for storing and accessing HMRC communications on VAT, e.g., rulings, options to tax acknowledgements, copies of ongoing correspondence etc.
  • Chatbot to immediately answer VAT questions
  • Workshops with taxpayers to discuss common industry issues and HMRC’s proposed Policy updates to allow HMRC to gain industry insight
  • More experienced/specialist HMRC helpdesk staff
  • Increased investment in HMRC VAT specialist resource
  • Real-time updates of HMRC’s guidance which provide more clarity, examples and explanations of HMRC’s views e.g. links to legislation
  • Industry-specific update notifications

Q21. To what extent would you support HMRC creating access through a taxpayer’s HMRC online account to all VAT information regarding the business, e.g., options to tax, rulings etc.

  • A great deal
  • A lot
  • A moderate amount
  • A little
  • None at all
  • I do not wish to respond/does not apply

Q22. Feedback received to date indicates there is a cost to the communication and access challenges identified with HMRC. Please describe the impact on your business of these challenges and if possible, estimate the annual cost to the business. For example, long delays in receiving responses from HMRC, guidance that isn’t as clear as it could be, non-specialist helpline staff etc.

Q23. Do you have an HMRC customer compliance manager?

  • Yes
  • No
  • I do not wish to respond/does not apply

Q24/25. Which aspects of the CCM model are/would be most valuable to you? Please rank in order of importance.

  • Named tax specialist contact
  • Regular Business Risk Review (BRR) meetings
  • Coordinated view across all taxes
  • Ability to discuss in real-time with HMRC
  • Speed of response – e.g., in comparison to central HMRC mailboxes
  • Ability to engage specialist teams within HMRC e.g., Policy

Q26. Have you responded to a VAT consultation, call for evidence or similar initiative released by HMRC in the last four years?

  • Yes
  • No
  • Other (please explain)

Q27. Please provide any further thoughts on areas of VAT the Government should be prioritising in the coming years.

We thank you for your time spent taking this survey and your response has been recorded.

If you would like to be involved in further Future of VAT in the UK conversations, please drop us an email at futureofvat@uk.ey.com.