VAT Returns

Gordon Banks (Ochil and South Perthshire) (Lab)
1. What estimate he has made of the average annual savings to Her Majesty’s Revenue and Customs over the next three years arising from the introduction of paperless value added tax returns.

The Financial Secretary to the Treasury (Mr. Stephen Timms)
Businesses turning over more than £100,000 per year, and all newly registering businesses, will be required to file online from 1 April. Savings of about £4 million a year are expected within three years as a result, but the main reason for the change is to make the service work better—fewer errors, faster turnarounds and an extra seven days before businesses have to pay the tax due.

Gordon Banks
I thank my right hon. Friend for his answer—and, indeed, my hon. Friend the Member for Vale of Clwyd (Chris Ruane) for lending me his pen earlier. Has my right hon. Friend considered the impact that the changes could have on some small businesses that reach the £100,000 threshold, but for which a paperless VAT return might not bring a saving, but a cost, especially in these hard economic times?

Mr. Timms
Yes, we have been thinking about that. We have consulted and will announce our conclusions shortly. However, we have provided quite substantial financial help to businesses signing up to online filing—£900 million in total before the scheme closed earlier this year. I can reassure my hon. Friend that we will provide a detailed, step-by-step guide to registering for online services in the February letter that will set out the requirement to file online. The change will bring benefits to HMRC and to businesses as well.

Richard Ottaway (Croydon, South) (Con)
Given that a survey by the Revenue showed that most businesses were totally unaware of the obligation, how did the Government get on with their target that at least half of businesses would be filing their returns electronically by March 2008?

Mr. Timms
We are making very good progress, and there will be—indeed, there already has been—a substantial campaign to inform businesses of their obligations. Over the next few months more efforts will be made to ensure that everybody is aware of them. Telephone support, for example, will be available to businesses that have queries, and help will also be provided through a programme of presentations and drop-in sessions. Most people will have to make their first online return next July, so we still have a number of months in which to advise businesses, and we are determined to get this right.

Mr. Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD)
Will the Minister assure us that he will devote enough management time and resources to this stage of reforms, so that we can avoid the utter chaos experienced by many of my constituents with more recent reforms? As a result of the latter, for many people it is taking months to get thousands of pounds of tax that is their due repaid.

Mr. Timms
Of course, one of the great strengths of filing online is that it speeds up the whole process—for exactly the reason that the hon. Gentleman set out. We have had very good experiences, for example, with online filing of self-assessment returns, and I am confident that those benefits will be repeated when businesses go online for VAT filing and other taxes.