Value Added Tax (Collection) (Hansard, 10 July 1975)

§ 23. Mr. Freud
asked the Chancellor of the Exchequer what recent representations have been received in respect of VAT collection by small businesses.

§ Mr. Robert Sheldon
We have received representations that some form of payment should be made to small businesses to compensate them for the cost of collecting VAT, but I am afraid it is not possible to meet that request.

§ Mr. Freud
Is the Financial Secretary aware of the fact that my constituents are sick and tired of VAT forms, and having to act as unpaid tax collectors for the 731 Government, and would like some financial assistance to compensate them for the hours spent completing their VAT returns?

§ Mr. Sheldon
Although we have received representations, the position is as it was when the legislation was introduced in 1972. We drew attention to the problems which would be caused by that legislation. That has proved to be the fact. As time goes on we hope to be able, by means of schemes and such like, to reduce the incidence and the burden upon the traders concerned.

§ Mr. Townsend
Will the Financial Secretary consider raising the level at which employers start paying VAT, bearing in mind the high rate of inflation?

§ Mr. Sheldon
This matter is under review, but it must be remembered that the level at which firms become registrable for VAT is high compared with the level which operates in other Community countries. That factor is not directly involved here but it is nevertheless one of which we have to take some account.

§ Sir G. Howe
Does not the Minister recognise what is manifest, namely, that the problems of collecting VAT have already been greatly increased by the introduction of the multi-rate structure? Will he give a pledge that the Government will take no further steps down that road?

§ Mr. Sheldon
The Conservative Government, to which the right hon. and learned Gentleman belonged, introduced VAT as a broad-based, comprehensive tax, free from anomalies. It never was that and it is never likely to be. We have improved it in some ways. In difficult circumstances we have produced £300 million extra revenue which is necessary to reduce the borrowing requirement, and we make no apology for so doing.