Skip to main content

Value Added Tax

Volume 210: debated on Thursday 25 June 1992

The text on this page has been created from Hansard archive content, it may contain typographical errors.

To ask the Chancellor of the Exchequer what changes he intends to make in the scheme announced in the budget whereby the largest VAT payers would be required to make monthly payments on accounts from the autumn of 1992.

Customs have now completed the consultation exercise launched on Budget day on the details of the scheme. All representations made have been considered most carefully. I can now confirm that the broad outlines of the scheme announced by my right hon. Friend will remain unchanged. However, we have been able to agree to some modifications which respond to points made in consultation.Businesses with net VAT payments of over £2 million will still pay monthly amounts on account instead of paying quarterly as at present. However, a business will not now be included in the scheme where exceptional transactions in the year ending 31 March 1991 caused it to exceed the £2 million VAT threshold.Second, lower monthly payments will be permitted where a change in business circumstances results in a reduction of VAT liability to 80 per cent. or less of that in the reference period. This responds to concerns that the original two-thirds trigger was too low.In addition, we intend to review the criteria for selection for inclusion in the scheme once we have some experience of its operation.

We have received representations that monthly payments on account should be confined to those EC importers who will gain from the introduction of the postponed accounting system. We have considered these very carefully, but have concluded that this is likely to be inconsistent with the single market and that the scheme would be at serious risk of successful challenge in the European Court of Justice.