ACCOUNTING FOR AND PAYMENT OF TAX (Hansard, 12 July 1972)

§ Mr. David Mitchell
I beg to move Amendment No. 195, in page 20, line 21, at end insert: 'In respect of goods of £15 or less in value the regulations shall not provide for a tax invoice to show value-added tax as a separate item'

§ Mr. Deputy Speaker (Mr. E. L. Mallalieu)
With this we can conveniently discuss the following Amendments:

§ Mr. Mitchell
I do not want to take much of the time of the House—[Interruption.] But, cashing in on the popularity which I seem to have engendered with that remark, may I say that in Committee we had a clear indication from the Financial Secretary that he was thinking of making invoices to the value of £10 or less in a more simple form, not having to show VAT as a separate item. I have a letter from the hon. Gentleman in which he says: For small transactions up to £10 in value a less detailed form of tax invoice will be acceptable and this will not need to show the tax amount separately We did not, however, have any discussion on the question—why £10? The Small Business Association is anxious that this should be aired because it is felt that a large number of shopkeepers will have to take on a lot of clerical assistants to deal with individual itemised value added tax invoices, and it is thought that a figure of £15 or £20 or £25 would better enable a large number of transactions to be carried through without increasing the added clerical work involved. I am sure that this is so straightforward that the Financial Secretary will be anxious to accept one of these Amendments. I have, therefore, given him the choice of three.

§ Mr. Higgins
I will not take much of the time of the House either.
The object of the Amendments, which are alternatives, is to provide that a taxable person cannot be required by regulations to issue a tax invoice—that is, a document which shows tax chargeable as a separate item—for a supply of goods of a value not exceeding one of several suggested amounts. The Amendments do not mention supplies of services, but this omission is probably unintentional.
One effect of the Amendments would be to increase the possibility that traders would make mistakes when claiming deduction of input tax, since they would have to work out for themselves the amounts of tax included in the overall prices charged by their suppliers for these small consignments. This will be a simple calculation if the standard rate of tax is 10 per cent. but could be much more difficult with a different rate. I will not provoke the House by suggesting which direction the rates might go under this Government and which direction they might go under the Labour Government. Mistakes could result in losses by the Exchequer or by taxable persons.
Another, and potentially more serious, effect would be to limit the Crown's power to recover tax from a person who issues a false or incorrect invoice, since Clause 33(2) applies only where an invoice shows tax as a separate amount.
A registered taxable person will normally have to issue a tax invoice for each taxable supply, other than a zero-rated supply, that he makes to another taxable person, and to keep a copy of the invoice. These invoices will provide evidence of the tax payable by the supplier, as shown on his tax returns, and supporting evidence for the recipient's claim for deduction of input tax. It is essential that, except for small transactions, they should show clearly the amount of tax chargeable, so that the receipient will deduct neither more nor less than that amount.
A simplified system has been devised for retailers and other persons who mostly supply goods or services direct to the public and who do not normally issue invoices. They will not be required to issue tax invoices at all for supplies to the general public and even for supplies that they make to taxable businesses they will be allowed to issue less detailed tax 1727 invoices than the normal ones if the value of the transaction is £10 or less. Such invoices will not need to show the tax charge separately and the retailer will not have to keep copies of them. Restricting the issue of such invoices to supplies of a value not exceeding £10 limits the risks involved in any departure from that full invoicing requirements.

§ Mr. David Mitchell
In view of what my hon. Friend said, although not in view of the satisfactory nature of his reply, I beg to ask leave to withdraw the Amendment.