OBR: Small firms could cut revenue to avoid VAT registration The Office for Budget Responsibility (OBR) says tens of thousands of small firms could deliberately cut revenues due to the eight-year freeze in the VAT threshold. The OBR warned of an increasing “distortion” caused by plans to hold the turnover level for registration at £85,000. The analysis suggests that by March 2026, when the freeze is due to end, 44,000 firms will have capped their earnings, forgoing a total of £350m a year in revenues. The OBR said there had always been some “bunching” of firms just below the threshold but noted that the “scale of the distortion below the threshold has been increasing.” We have already seen small motorsport businesses following this course of action, so the risk to growth is very real.