ICAEW invites research proposal for UK VAT reform

ICAEW has called for research proposals into the simplification of the UK’s VAT system to be submitted by 30 June 2024.

The winning entrant will receive a £5,000 prize and the opportunity to present their research at a VAT Conference to be held at Chartered Accountants’ Hall in London in 2025.

ICAEW said it is seeking “innovative and practical ideas”, in no more than 2,000 words, on how to reform the UK’s VAT system to meet the challenges of the coming decade. The successful proposal should identify current challenges within the system and might explore the potential impact of a modernised VAT system on consumer behaviour, economic growth, or fiscal stability.

A survey of members of the OECD’s Forum on Tax Administration found that the UK’s VAT system is more burdensome on business than those of countries with a modern VAT system, such as Singapore, New Zealand and Australia.

The ICAEW said the complexity of UK VAT “hinders effective policymaking, reduces the efficiency of tax collection and administration, and presents a barrier to HMRC’s digitalisation efforts”.

Authors are encouraged to look at international examples of successful VAT reforms and consider how these lessons can be applied to the UK, in the context of the evolving global landscape and the UK’s post-Brexit autonomy.

Ed Saltmarsh, ICAEW technical manager, VAT and Customs, said: “The UK has one of the most complex systems of VAT in the developed world, hindering businesses and HMRC, and ultimately impacting taxpayers and consumers. The VAT registration threshold stifles small business growth, while the numerous exemptions and zero rates create uncertainty and can lead to absurd disputes, such as whether poppadoms are crisps or Jaffa cakes are biscuits.

“We’re looking forward to seeing the VAT reform ideas that entrants come up with to tackle the challenges of the next decade and wish all entrants the best of luck.”