VAT: Accountancy

Mr. Philip Hammond
To ask the Chancellor of the Exchequer what his estimate is of the annual (a) revenue cost and (b) cash flow impact on the Exchequer of making value added tax (VAT) cash accounting available to all VAT-registered traders.

Mr. Timms
It is estimated that making cash accounting available to all VAT-registered traders would have an accruals and cash cost to the Exchequer of £1.6 billion in the first year and negligible cost thereafter. The cash accounting threshold was doubled in 2007 and is already as high as is permitted under the UK's derogation from EU law.