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21st Jan 2022
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Call for compensation for VAT delays

by The Editor at 09:40 20/08/07 (News)
A major professional tax body has highlighted the problems caused by VAT registration delays and called for a inquiry into the matter and for compensation to be paid to businesses who have suffered financially.
The Tax Faculty, part of the Institute of Chartered Accountants of England and Wales, asked its members for information about the delays in June. Based on other information received, it has prepared a paper, which will be submitted to government, HM Treasury and HM Revenue & Customs.

Public concern
The background to the paper is the mounting public concern about the delays occurring to VAT registrations and the impact it is having on UK businesses. Government, HM Treasury (HMT) and HMRC are aware that the continuing and increasing delays in processing VAT registrations are damaging to business, both in time and cost.

The Tax Faculty is concerned that the continuing delays have damaged HMRC’s reputation and will act to discourage good tax compliance from taxpayers.

The Tax Faculty said: "We entirely understand and support the need for more detailed checks on VAT registrations to help reduce fraud and, in particular, MTIC or Carousel fraud. However, we are concerned that the more detailed checking procedures have been implemented without adequate resources. Further, this is compounded by HMRC’s policy decision to scale down the work at two of the four VAT Registration Units (VRUs) - the HMRC offices processing VAT registrations - prior to their closure.

"It appears that the combination of more extensive checking of VAT applications and a rationalisation and reduction in the number of VRUs have together resulted in lengthy delays to processing VAT applications."

Inquiry
The paper explains the nature of the delays and why they are so harmful to business and the paper makes a number of recommendations.

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It believes that this matter is of such importance that it should be the subject of an inquiry by a Parliamentary Committee and has suggested that the Public Accounts Committee, which has published a report on VAT (MTIC) Fraud in the past week, would be an appropriate Committee to carry out such an inquiry.

Other recommendations include providing compensation for businesses that suffer financially as a result of the delay and that HMRC should provide detailed monthly statistics so that there is an external measure of how matters are progressing.

The Tax Faculty then makes a number of operational recommendations and suggest the introduction of three, temporary, extra statutory concessions to alleviate some of the burden caused by the delay.

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Susie Hughes
The Editor © Hardhatter 2007

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