The details emerged in the committee’s replies to a series of written questions from Deputy Rob Curgenven, who has pressed it on how a 3% GST would work in practice for islanders and small businesses. He said he wanted to test again if the proposals would be fit for purpose.
The committee said transactions of residential land and property would be zero-rated, while commercial property would be taxed at the standard rate, but could be reclaimed by GST-registered businesses.
On second-hand goods, it said a margin scheme was being developed so that GST on items such as used cars would fall only on the difference between what a trader paid and what they sold it for. Second-hand goods sold by charities would be exempt.
Small businesses handling large numbers of small cash or card payments would be able to use a ‘retail scheme’ modelled on one already running in Jersey. Rather than record GST on every sale, they would apply a formula to their gross takings, then reclaim GST on their own purchases. The scheme would have no upper turnover limit.
The committee said it was also looking at annual accounting, allowing some firms to file a return just once a year, and cash accounting, letting small traders account for GST only once they had been paid.
It ruled out copying the UK’s flat-rate VAT scheme, saying a Guernsey GST would be ‘very much less complex’ and that a flat rate was likely to be unnecessary. No business had so far asked for one, it said, though it would reconsider if the case were made.
Deputy Curgenven also raised sales of goods at the roadside.
P&R said that, with compulsory registration set at £300,000 of turnover, very few if any hedge veg stalls would need to register, and that stalls and vending machines taking less than £250 a transaction would not have to issue receipts – the same approach taken in Jersey.
Islanders building their own homes could expect help similar to Jersey’s, where self-builders can either have construction zero-rated or pay and reclaim the GST, subject to the Housing Committee’s aims.
On family heirlooms brought back to the island, the committee said existing reliefs for people moving their home to Guernsey would apply, as GST would be treated as a customs duty at the border.
It added that, under the wider tax reform, no one earning between the current lower earnings limit and a new social security allowance would lose contribution entitlement, with a credit maintained for that group.
The States continues its tax reform and GST debate at the end of September.