- Split payments use card payment technology to collect VAT on online sales and transfer it directly to HMRC.
- HMRC is interested in implementing split payments, but there are significant hurdles.
- HMRC published a Prior Information Notice and Request for Information to gather views on split payments.
- The expansion of online shopping has brought challenges for tax systems.
- Cross-border online sales can result in large VAT losses for tax authorities.
- Fraud by online sellers is difficult to combat.
- There are three proposed methods for split payments: standard rate split, Flat Rate Scheme, and net effective rate.
- None of the proposed methods appear reasonable or practical.
- Split payments technology already exists and is used in some countries.
- Split payments are expected to be implemented in the future, but the form and timing are uncertain.
Source: deeksvat.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
