IEA responds to prospect of tougher VAT rules on apps

14 Dec 2020 01:28 PM

Julian Jessop, IEA Economics Fellow, responded to the new Treasury consultation on VAT and the sharing economy 

“It would of course be wrong for a big company to be able to avoid charging VAT simply by splitting into smaller business units that fall below the £85,000 threshold. Nonetheless, it would also be wrong to force a self-employed taxi driver to charge VAT just because they happen to get most of their customers from an app. The same applies to someone who occasionally rents out their home, or sells goods on an online marketplace.

“This feels like yet another attempt to find revenue from a relatively new and thriving part of the digital economy. It would clearly work against the interests both of small businesses and consumers who would inevitably end up paying higher prices.”

Notes to editors

Contact: Annabel Denham, Director of Communications, 07540770774

Julian Jessop is available for further comment.

For further IEA reading on taxing tech:

• The trouble with the EU’s digital tax
• Trade wars and digital taxation
• Supervising the tech giants

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.