HM Treasury has ‘burnt its bridges’ – consumers warned they’ll face online sales tax costs

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Tax reforms may be laid out this week as Rishi Sunak reveals his Spring Budget. The Chancellor may have no choice but to address coronavirus spending, which according to the ONS may push public debt to £400billion this month.

Rishi Sunak has repeatedly detailed he would do “whatever it takes” to keep the economy afloat, but at the same time he has acknowledged covering coronavirus spending would have to be addressed at some point.

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Pensions and other assets could be targeted for this but many expect the Chancellor to introduce some form of online sales tax in an attempt to target large companies like Amazon.

However, this idea has been condemned by many who argue it will not be companies like Amazon who will be hit by this, but instead smaller firms and their customers, as Melissa Geiger, KPMG’s Head of International Tax and Tax Policy recently explained: “It is probable that any online tax would be passed onto consumers rather than being borne by the retailer.

“The Chancellor may feel that such a move might help rejuvenate the High Street as an alternative to online shopping as the economy begins to reopen following Covid.

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“We’re gaining traction in developing a retail ecosystem that works for retailers and customers, that protects and supports small businesses and encourages people into bricks and mortar stores.

“An online sales tax will only damage this developing UK industry before it really gets off the ground and that concerns me for the sector.”

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Those running these kinds of smaller online retailers are they themselves beginning to worry.

Ahead of this week’s Budget, a number of small business owners stepped forward to voice their concerns which included Bryony Lewis, the founder of the online gift website T & Belle, who had the following to say: “I feel really strongly about the proposed introduction of an online sales tax and how it will affect small independent e-tailers.

“I sell exclusively online and if these taxes are introduced, I would be forced to pass the increased cost onto my customers.

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“I feel like adding extra taxes at a time when small businesses are still reeling from the pandemic and Brexit is the wrong call.”

Beverley Wakefield, the co-founder of Vibrant Accountancy, was more scathing: “Whatever the Chancellor announces on Wednesday, I fear the Treasury has burnt its bridges with a huge number of small businesses that it will rely on to reignite the economy.

“While the pandemic will force more businesses to start, for the simple reason that fewer people are in jobs, I’m concerned that small business owners will be penalised in new tax measures.

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“After all, the Government has made it crystal clear it does not like how small business owners remunerate themselves.

“Let’s hope this isn’t the case given that small business owners are the lifeblood of our country.”

Rishi Sunak this far has remained tight lipped on what will be revealed in the Budget, refusing to confirm any details ahead of March 3.

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However, when the Budget was announced in December, HM Treasury did confirm: “The Budget will set out the next phase of the plan to tackle the virus and protect jobs and will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR).”

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