Friday, 1 July 2005
Government urged to overhaul VAT laws
The call from accountants and business advisers PKF comes as a result of the help given to suppliers of MG Rover when the company collapsed.Under the current tax regime, suppliers pay VAT on goods and services they have invoiced before they receive payment themselves."They can reclaim the VAT," said Simon Littlejohns, a tax partner at PKF, "but if a customer company goes into receivership or liquidation it can take six months from the invoice date before a claim can be made."Magically, when MG Rover hit the buffers with a severe impact on its component suppliers, the Government came up with a unique concession overnight."He added that the same treatment should be available to other businesses in "equally hard-pressed markets".However, a HM Revenue & Customs (HMRC) spokeswoman said there would be no permanent law change, stressing that it always strived to help businesses in struggling sectors, such as those affected by the MG Rover collapse or the foot-and-mouth crisis in 2001."HMRC responded constructively and speedily to requests from businesses affected by the administration of MG Rover in the same way they would respond to any business facing temporary financial difficulties," she said."This includes agreeing time to pay for debts, with each case being judged on its merits, but does not constitute a change to existing rules which are set down in legislation."
- To find out how HMRC can help with VAT payment problems, visit www.hmrc.gov.uk/businesses/moreiwt.shtml
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