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VAT Notches, Voluntary Registration, and Bunching: Theory and UK Evidence

Using administrative tax records for UK businesses, we document both bunching in annual turnover below the VAT registration threshold and persistent voluntary registration by almost half of the firms below the threshold. We develop a conceptual framework that can simultaneously explain these two app...

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Bibliographic Details
Main Author: Liu, Li
Other Authors: Lockwood, Ben, Almunia, Miguel, Tam, Eddy
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2019
Series:IMF Working Papers
Subjects:
Revenue Administration
Tax Evasion And Avoidance
Finance
Optimal Taxation
Vat Registration Thresholds
Public Finance & Taxation
Taxes
Fiscal Policies And Behavior Of Economic Agents: Firm
Corporations; Taxation
Competition
General Financial Markets: General (includes Measurement And Data)
Corporate Income Tax
Compliance Costs
Financial Markets
Business Taxes And Subsidies
Efficiency
Corporate & Business Tax
Corporate Taxation
Tax Administration And Procedure
Taxation
Value-added Tax
Finance: General
Spendings Tax
Finland
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Using administrative tax records for UK businesses, we document both bunching in annual turnover below the VAT registration threshold and persistent voluntary registration by almost half of the firms below the threshold. We develop a conceptual framework that can simultaneously explain these two apparently conflicting facts. The framework also predicts that higher intermediate input shares, lower product-market competition and a lower share of business to consumer (B2C) sales lead to voluntary registration. The predictions are exactly the opposite for bunching. We test the theory using linked VAT and corporation tax records from 2004-2014, finding empirical support for these predictions
Physical Description:78 pages
ISBN:9781513513812

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