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Volume 498: debated on Monday 26 October 2009

To ask the Chancellor of the Exchequer (1) what consultation HM Revenue and Customs undertook with businesses prior to the decision to phase out paper-based value added tax returns; (295188)

(2) what estimate he has made of the number of posts in HM Revenue and Customs which will no longer be required as a result of the decision to phase out paper-based value added tax returns;

(3) whether HM Revenue and Customs assessed effects on costs of small businesses of the phasing out of paper-based value added tax returns.

In addition to consultations carried out as part of Lord Carter’s review of HM Revenue and Customs (HMRC) Online Services, published at Budget 2006, HMRC conducted a 12 week consultation—concluding on 3 July 2009—on the draft regulations to implement the phasing out of paper-based VAT returns.

HMRC’s estimate of the benefits from phasing out paper VAT returns is subject to periodic updating. The staff saving is currently estimated at 26 full-time equivalent staff posts, but this does not include certain areas where the business change effect is still being evaluated.

Very small businesses that are already registered for VAT will not be affected by the proposal to phase out paper VAT returns from 1 April 2010, but any business registering on or after 1 April 2010 will not have the option of making paper based VAT returns. The Impact Assessment undertaken does not differentiate between different sized businesses.

Research has shown that internet use is highest among new businesses and projections indicate that by 2010 internet usage among new businesses will be almost universal.