Prolonged VAT delays fan fury of small firms with the Government

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The Independent Online

Small businesses in Britain are facing unprecedented delays in registering for VAT, with firms in Northern Ireland having to wait as long as 54 days, government figures have revealed.

Self-imposed government targets dictate that firms should not have to wait more than 14 days to become VAT-registered with HM Revenue & Customs (HMRC). But government figures show that in April only 7 per cent of applications met the target, while just 17 per cent were processed by the end of the 14-day window during June.

Britain's most efficient office in Wolverhampton still takes 32 days to process applications.

With the small and medium-sized business arena reeling from corporation tax hikes in the last Budget and the abolition of taper relief in the pre-Budget report, news of additional problems are set to fan the flames further.

"If the Government wants to get more people to start businesses, it must make sure VAT registration is quick and simple," said a spokesman for the Federation of Small Businesses. "Long delays are not acceptable for any reason when the future of new businesses is at stake."

Tory Treasury spokesman David Gauke said: "This is an ongoing problem which we have been warning about for well over a year. In that time, performance has continued to decline and, at one point this year, HMRC had practically ceased to process any VAT applications in a reasonable time. In addition to a rising regulatory burden and rising taxes, businesses are having to cope with government departments failing to provide an acceptable service."

A spokesman for HMRC said: "With increased incidents of carousel fraud [a type of VAT crime], the number of checks that have to be performed has increased. We saw a spike in applications because of Budget changes to so-called managed service companies, while there have been a number of efficiency savings cutting the processing offices from four to two. It hasn't reduced overall staff levels, but some people have had to be retrained."