The UK Government is set to leave the EU on the 31st of March 2019. The negotiations around the UK’s participation in the single market and the (or ‘a’) Customs Union will rumble on for the foreseeable future. What is nailed on certainty is that The UK will not be dropping VAT on imports. What is unclear currently is how business (all businesses) will pay their VAT dues to HMRC. The answer, unlike the BREXIT conundrum, could be blockchain. We believe a cryptographically secure way of handling VAT payments will reduce fraud, streamline the process for business and, ultimately, could add up to £30bn to UK GDP, per annum. The size of the missing revenue prize for HMRC from VAT payments was estimated by them at least £16bn. But, with sales through Amazon and eBay alone resulting in a £1bn missed opportunity, we suspect this is the tip of the iceberg.
A real-time blockchain based database is the answer.
If all imports (and exports) were stored on a blockchain, the transaction starts at the point of purchase, which triggers a cryptographically secured hash. The purchase of 50 litres fuel, for instance, is simply a fraction of the purchase 50,000 litres already on the blockchain. The transaction is logged to a single user, be it personal or business. The VAT and other aspects are added to the hash. This offers HMRC a clear vision of input and output VAT values, all in real-time, all traceable to HMRC’s own, current self-service portal.
The corner shop will issue invoices for every transaction over £2 to allow the user to reclaim the VAT and the VAT to be reported. This means a true reflection of the VAT obligations of the business rather than a pure chase business.
The UK GDP could well increase massively because all goods bought and sold, or imported or exported will be recorded rather than hidden. From our research, we estimate the boon to the economy could be up to £30bn per annum. The research team at Yotta Laboratories estimate that a blockchain based VAT solution could potentially increase GDP up to an estimated £30bn per annum. Exports will be recorded correctly. Payment of the correct duty will allow business to report the correct turnover. HMRC will then have a clearer picture of money owed to and from them.
Imports and online business can be blocked at the border. This will allow an even playing field for online businesses with bricks and mortar stores. Amazon will have to validate the sellers; turnover and they pay tax correctly. Why? Because, in order, to sell everything needs to be recorded on the blockchain.
© Yotta Laboratories