Small and medium-sized enterprises (SMEs) could face a VAT charge for the first time if MPs vote for the Prime Minister’s Brexit deal.
Under the terms of the proposed Withdrawal Agreement, the UK would be required to implement the European Union’s Directive, which states that the VAT threshold needs to be lowered from a turnover of £85,000 to £76,700.
The proposal objective is to harmonise tax systems, but if the Directive took effect during the transition period, the UK would lose its right to veto the plans.
The report adds that this could have ‘significant implications for small businesses’ and goes on to say that it is ‘particularly concerning in this regard that the UK will lose its veto over the proposal on 29 March next year’.
Both Brexiteers and supporters of the People’s Vote have slammed the news, with one Eurosceptic MP claiming that it is an example of how the transition period in the Withdrawal Agreement could have dangerous implications for domestic businesses in the UK.
Meanwhile, Labour’s former Shadow Chancellor, Chris Leslie said: “This is another thing that none of us could possibly have known about back in 2016 and whatever way you voted then you weren’t voting for more taxes and bureaucracy on small business and the self-employed.
“The Prime Minister’s plan makes the UK a rule-taker and removes our say around the table.”
Mr Leslie added: “The real choice now is whether to go ahead with a Brexit deal or stick with the deal we already have as members of the EU.
“Now we know what Brexit looks like, the public should be given the opportunity to decide in a People’s Vote – is this the kind of deal we want, or is the deal we already have in the EU better?”