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Tory Outrage as Brexit Rules Prevent Chancellor from Reducing VAT Red Tape

Credits: South China Morning Post

Rishi Sunak is facing criticism following claims that Brexit rules prevented the government from reducing red tape for small businesses, particularly ‘White Van Man’.

During the Budget announcement, Chancellor Jeremy Hunt increased the threshold for small businesses needing to register for VAT from £85,000 to £90,000, ending a freeze in place since 2017. However, this move was deemed insufficient, as many firms are believed to be underreporting their incomes to avoid additional bureaucracy.

Tory and Members (Credits: The Independent)

Reportedly, Mr. Hunt told Conservative MPs that a larger increase in the threshold could only apply in mainland Britain due to the Windsor Framework agreed upon by Mr. Sunak.

This framework requires the UK to ensure that Northern Ireland businesses do not have a significant tax advantage over the EU, where the VAT threshold is €100,000.

Treasury sources have defended the decision, stating that the main reason for the modest increase was a ‘lack of funds’. They also noted that the Brexit rules are somewhat flexible, suggesting that other factors may have influenced the decision-making process.

The backlash highlights the challenges the UK faces in navigating the complexities of Brexit and ensuring that businesses are not unduly burdened by regulations.

Critics argue that more needs to be done to support small businesses, particularly in light of the economic challenges posed by Brexit and the ongoing COVID-19 pandemic.

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