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VAT

Volume 487: debated on Wednesday 11 February 2009

To ask the Chancellor of the Exchequer what assessment he has made of the effect on (a) businesses and (b) the Exchequer of the doubling of value added tax (VAT) turnover threshold for the VAT cash accounting scheme in 2007. (255464)

The increase in the VAT cash accounting scheme threshold in 2007 was estimated to cost the Exchequer around £120 million in 2007-08, as published in table A1.1 of the Financial Statement and Budget Report 2007. This represents the amount of VAT receipts delayed from 2007-08 into 2008-09 as a result of increased membership of the scheme. The effect on individual businesses depends on their turnover and how quickly they make and receive payments in the course of their business activities. The overall benefit to business is equivalent to the cost to the Exchequer.