Companies urged to move fast on VAT
Saturday 04 May 1996
The advice came yesterday from Alan Buckett, national chairman of the VAT Practitioners Group, in the wake of last week's landmark court victory by furniture company Primback. The Court of Appeal held that Customs had wrongly calculated the VAT payable on goods sold through interest-free credit deals ever since the tax was introduced in 1973.
Since Customs is appealing against the decision to the House of Lords, no claims can yet be made. But many of Britain's retailers dealing in items such as televisions and washing machines as well as furniture are preparing proceedings in case the tax authorities lose.
Many VAT experts calculate that - if interest is included - the cost to the Exchequer could be as much as pounds 5bn.
Mr Buckett, a VAT partner at accountants Binder Hamlyn, said the scale of the potential claims could prompt the Government into introducing a time limit. Ministers could also seek to pass wider anti-avoidance legislation, he added.
Customs said the idea was "pure speculation" at this stage. It is also seeking to downplay the figures on the grounds that it is "extremely difficult to accurately quantify" the number of businesses that are in the same position as Primback.
It is understood that it believes the amount it would have to pay if it loses the House of Lords hearing will be less than pounds 1bn.
However, this case - which follows the revelation of a pounds 6bn shortfall in VAT revenue for the financial year just completed - is believed to be just the tip of the iceberg.
Research just published by accountants Coopers & Lybrand suggests that the "worst-case scenario" could see the Treasury having to pay out between pounds 30bn and pounds 40bn over the next three years.
The biggest claim involves the "blocking order" under which Customs does not allow British companies to claim back VAT on the cost of cars purchased for their fleets.
The case, being brought in the name of the drinks company formerly known as Allied-Lyons, is due in court shortly and could lead to claims totalling pounds 15bn to pounds 25bn.
Mr Buckett believes that figure is exaggerated, with the true amount likely to be between pounds 5bn and pounds 7bn. He also suggests that the overall amount given by Coopers is too high, since it would approach the sum that was the total VAT collected last year.
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Watch a man race the Circle line and win
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 Grandmas keep accidentally tagging themselves as Grandmaster Flash on Facebook
- 5 Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Islamic State: Pope is 'being targeted by Isis', Iraqi ambassador to the Holy See warns
Jennifer Lawrence and Kate Upton nude pictures exhibition cancelled after artist concedes photos were 'stolen property'
Scotland independence: A nation divided against itself: Brown says SNP are liars. Darling joins in. Salmond fights back...
John Travolta addresses former pilot's gay romance allegations publicly for the first time
Richard III: Two years after his body was found, scientists discover how he died
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
Portuguese academic says British are 'filthy, violent and drunk'
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
iJobs Money & Business
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...