Value Added Tax (Payments on Account)

HC Deb 15 July 1992 vol 211 cc1194-205 7.20 pm

The Paymaster General (Sir John Cope

I beg to move, That the Value Added Tax (Payments on Account) (No. 2) Order 1992 (S.I., 1992, No. 1668), dated 13th July 1992, a copy of which was laid before the House on 13th July, be approved. The order introduces a scheme of VAT payments on account for the largest VAT payers from later this year. Commissioners regulations will also be necessary, giving a little further detail on the operation of the scheme.

As the House knows, the instrument has had a long gestation period. In October 1991, my right hon. Friend the Chancellor of the Exchequer announced that postponed accounting was to be reintroduced on goods received from the rest of the European Community. About 90,000 businesses will gain a cash flow advantage from that change in 1992–93. To prevent an increase in the public sector borrowing requirement, my right hon. Friend the Chancellor decided that the largest VAT payers should account for VAT monthly, as happens in most of the Community, rather than quarterly. About 1,600 businesses will be affected, and they are those with a VAT liability in excess of £2 million in the year ending 31 March 1991.

Following wide consultation with representative bodies, my right hon. Friend the Chancellor announced in the Budget just before the election that he had decided to modify the original proposal so as to require monthly payments on account instead of monthly returns from the largest VAT payers. The traders will continue to submit VAT returns quarterly and their liability will be adjusted by the amount that they have paid on account in the two previous months. That will minimise the admistrative burden on businesses and avoid exposing them to extra penalties while still protecting the PSBR.

Customs and Excise issued a draft leaflet on Budget day and invited comments. As a result, we have made some changes which should be helpful to businesses. First, we intend to exclude from the scheme businesses for which, although the VAT liability in 1990–91 exceeded the £2 million threshold, the figure for the year immediately preceding and the year immediately following were below that level. That is intended to take account of exceptional transactions arising in 1990–91 which might otherwise mean that a smaller business would be unjustly caught in the net.

Secondly, we have allowed for payments to be reduced if the VAT liability falls to less than 80 per cent. of that in the reference year used to calculate the payments. That is more generous than the two thirds originally proposed by the Chancellor. A short time ago, I was able to announce that the selection criteria for inclusion in the scheme will be reviewed when some experience has been gained of its operation.

As hon. Members will be aware, there have been representations from several bodies to the effect that it was unfair to put the burden of payments on account on the largest VAT payers. They said that it would be fairer to target the businesses that would benefit most from the new postponed accounting arrangements, that is, those who import goods from Community member states. We have carefully considered that but have concluded that such a scheme would run an unacceptably high risk of challenge in the European Court. Accordingly, the Chancellor was unable to accept those proposals.

In each VAT quarter, payments on account will be due by the last day of the second month and the last day of the third month and subsequently adjusted to the correct quarterly amount when the VAT return is sent in. Each payment will be one twelfth of the total VAT due, excluding the VAT on goods imported other than from member states in the reference year. For the first year, the reference year will be based on the 12 months ending in March, April or May 1992, depending on the VAT return cycle for the business in question. Provision is made for VAT periods of other than three months.

I am glad that in Committee the hon. Member for Wrexham (Dr. Marek) and the right hon. Member for Berwick-upon-Tweed (Mr. Beith) gave some support to the changes that we have made since the Budget. However, the Chancellor has made it clear that it would be wrong for the Government and the taxpayer to stand the cost of the postponed accounting arrangements on the PSBR for this year. In response to issues raised by business in the consultation exercise carried out by Customs and Excise, the scheme allows substantial easement of the original terms proposed in October 1991.

When the first version of the order was considered by the Statutory Instruments Committee, it thought, as hon. Members may have noted from the Committee's report, that some aspects of the order might be outside the vires provided. Therefore, last week we thought it right not to move the first order and to replace it with the second order, which the Statutory Instruments Committee considered yesterday. That is all documented in the Committee's report, and the order had been revised to take account of the Committee's comments.

7.26 pm

Dr. John Marek (Wrexham)

The order results from the Budget proposals in March. It replaces the original order No. 1510, and I again question this apparent waste of paper, time and money. I shall be interested to hear what my hon. Friend the Member for Bradford, South (Mr. Cryer) has to say about the Joint Committee's findings. Not much time was allowed for comments because people were given until the end of March following the Budget. It is unsatisfactory once again to have two orders, the first of which is not being proceeded with although it has been laid on the Table.

The instrument takes account of changes in the VAT rules which are to be implemented on 1 January 1993. The Opposition do not quibble with that, and will not force a Division. The order is clearly the result of protracted discussion with interested parties in various industries and in the House. It proposes that large traders with a VAT liability of more than £2 million in the year to 1 April 1991 would have to make monthly payments on account from, I think, the end of November. I am told that there are about 16,000 large companies to which the order will apply. Normal quarterly returns would be made. The on account figure is to be calculated by reference to actual payments in the year to March, April or May 1992, depending on the exact time of the quarterly return.

However, there are likely to be some problems. Traders over the £2 million limit might suddenly, as a result of the recession or some other unforeseen, or even foreseen, circumstance, fall below that threshold, thereby falling outside the scheme. But they will have to persuade Customs and Excise that they should come off the scheme. The original statutory instrument, 1510, paragraph 4, headed Persons to whom this Order applies", said: Save as the Commissioners may otherwise allow, a taxable person falls within this article if … I shall not read the whole paragraph. The important phrase was Save as the Commissioners may otherwise allow". That seemed to allow the commissioners some discretion about whether a person should be taxable under the scheme.

The new statutory instrument, 1668, does not have those words. It is completely rewritten. My hon. Friend the Member for Bradford, South may wish to comment on that in due course. Has the ability of Customs to decide whether someone should be in the scheme disappeared as a result of the new statutory instrument?

If the percentage of VAT due is down to 80 per cent. or less, adjustments can be made to the monthly payments. That provision has been carried forward from the old statutory instrument to the new one. Paragraph 11 of statutory instrument 1668 says: with effect from the date of the written approval by the Commissioners of a written application by the taxable person to that effect, the lesser amount shall be substituted for the greater amount and the amount of each payment on account beginning with the first payment on account which falls to be made after the date of that approval shall, subject to article 10 above, equal one twelfth of that lesser amount. But Customs has to be satisfied that the total amount of tax due is less than 80 per cent. There could be delays. If there are delays, can the Minister assure the House that they will be kept to a minimum and that the commissioners will act as expeditiously as possible? It clearly cannot be right for the commissioners to wait a month, perhaps because they are snowed up with other work, and to insist on certain traders paying sums on account which are clearly well above the sums that they would be paying if an up-do-date view were to be taken of their trading activities. That is a problem on which the House requires assurance.

As the Paymaster General said, domestic traders will be affected rather than traders who import and export, who will be able to take account of the postponed accounting system. The Paymaster General also said that there will be a review of the criteria for selection for inclusion in the scheme. Can he give some idea of the timing of that review? Clearly the sooner the consultation is undertaken and the decisions made by the Government, the better. One year, a trader may be above the £2 million threshold, and the next below it. The Government might want to increase the threshold to take account of inflation from time to time. That can lead to uncertainty for a trader which cannot be good for his business.

Therefore, I make a plea to the Government to get on with the review. No doubt it is right that there should be some experience of how the present system works, but it should not take a day longer than necessary. After that, I hope that, as a result of the review, there will be a generally accepted view of how the system should operate.

A further problem may arise as a result of the related rules on groups for companies that can be sold out of a large group. There seems to be an inability to leave the club. Will the commissioners have any power to ensure that such difficulties do not develop? That could easily be an important issue, particularly as the original statutory instrument seemed to give the commissioners the power to take a particular trader out of the scheme without having to give any reason, which is not the case in the new statutory instrument.

A problem arises as a result of traders whose liability last year exceeded their liability this year. They will have an adverse cash flow to bear as a result of the proposal. Paragraph 11 provides that taxpayers may apply for a reduced payment if their total tax is likely to be below 80 per cent., but no other situation is covered.

I have dealt with some of the difficulties that traders may have with regard to the 80 per cent. rule and the fact that there is no immediate way of ensuring that a trader falls out of the scheme's remit, except perhaps by waiting a year in order to demonstrate to the commissioners that his total tax revenue is below £2 million. That is too crude and it needs to be refined. It is a bit hard on traders, particularly domestic traders, for example in the service industries, who will not receive any corresponding cash flow benefits from the new intra-EC rules.

Will the Paymaster General think ahead to 1996–97? If there is such an adverse effect on domestic traders when we move to an origin-based VAT system, can the situation be redressed in any way? For the sake of equity, there should be such redress. Will the Government bear in mind that domestic traders will have to bear extra costs as a result of this statutory instrument and any new legislation leading up to 1996–97, and if possible to redress the cost?

I am also advised that the Customs leaflet issued in 1992—I have not seen it so I could be wrong; I usually check everything, but I have not been able to obtain the leaflet—contained some ambiguous statements. The statutory instrument will affect it and it will need to be rewritten and reprinted. Has the Paymaster General or his Department had any representations on that? If so, I hope that he will take them on board and will print a new and unambiguous leaflet so that traders know their position exactly.

I am concerned about the validity of the Government's proposals. This could be a serious point, depending on the Government's legal view. There is the problem that the Government have conceded the practical difficulties of submitting monthly returns, but the relative provisions of the sixth directive, article 22(5), may be read as restricting the ability of member states to deviate from the rule requiring payments one month after the VAT return period to the case where interim payments are required for every taxpayer.

Are the Government satisfied that that proposal and the statutory instrument are permitted by the fifth directive? If they are not, will they seek an appropriate derogation? Article 22(5) of the sixth directive states: Every taxable person shall pay the net amount of the value added tax when submitting the regular return. Member States may, however, set a different date for the payment of that amount or may demand an interim payment. If that provision applies to some, does it apply to all?

I hope that the Paymaster General can say that there is no risk of infraction proceedings, or whatever, initiating in Brussels as a result of the statutory instrument. With those reservations, I hope that the order will be passed this evening.

7.40 pm

Mr. Michael Stern (Bristol, North-West)

I commend my right hon. Friend the Paymaster General for his courage in introducing this statutory instrument today. I appreciate that there may be budgetary reasons for doing so before the summer recess, but I refer to my right hon. Friend's courage because the scheme that the measure introduces has come under considerable attack—and will continue to do so.

Some time ago, representatives of the 1,600 companies most affected were assured by my right hon. Friend the Chancellor of the Exchequer that, if an alternative were submitted, it would be considered. In his opening remarks, my right hon. Friend the Paymaster General dealt effectively with one alternative—to load the burden of the new impost on to importers. He did not refer, however, to a suggestion made by the companies most adversely affected by the order. I refer to the so-called Danish solution, which would negative at least part of the resultant adverse cash flow that companies fear will result from the order. Perhaps my right hon. Friend will explain why the Government decided to reject the Danish solution.

A more serious concern was touched on by the hon. Member for Wrexham (Dr. Marek)—the relationship between the order, the treaty of Rome, and the European Court. My right hon. Friend is aware that a legal opinion is winging its way to the Treasury, where it is expected to arrive on Friday—from Maître Waelbroeck, who is regarded as an expert—to the effect that there is a serious risk that the order will provoke infraction proceedings under article 1 of the treaty on the grounds that it will distort competition, introduce tax neutrality, and discriminate against importers.

I have neither the knowledge nor the foresight to say whether that opinion has any validity, but given that copies will reach the Treasury as soon as they are available, it is legitimate to question my right hon. Friend as to the robustness of the Government's opinion that there is no risk of infraction proceedings under article 101. I shall be grateful if my right hon. Friend can provide reassurance on that point.

7.44 pm

Mr. A. J. Beith (Berwick-upon-Tweed)

This change will affect 1,600 large businesses. It seems harsh that the firms which will be adversely affected by the requirement for monthly payments will often be domestic concerns trading at home, whereas the businesses which may benefit from the windfall advantages will in many cases be companies which import goods into this country. I appreciate that we cannot devise a procedure that will have the reverse effect, because that would be contrary to Community law, but that unfortunate feature strengthens the case for examining the grievances of those large companies on their merits.

Value added tax is not the property of the businesses which collect it from their customers; it is handed over to Customs and Excise. Nevertheless, the realities of life are such that many businesses will not have collected on VAT invoices to their customers by the time they are required to remit their monthly VAT payments on account. They therefore make an interest-free loan to the Government.

That is a significant burden, particularly at a time of recession. Once a company is included in the monthly payment scheme, it incurs a significant cost. That is relevant to the timetable issue and to the selection criteria for inclusion in the monthly payment scheme. Whether or not a company is in the scheme could make a significant difference, arid might adversely affect its competitive position.

The hon. Member for Wrexham (Dr. Marek) pointed out that the potential move to an origin-based system in 1997 or later could bring a complete change and result in additional Government revenue. The businesses concerned wonder whether there will be alleviation at that stage for firms which have been adversely affected.

The businesses which will be most affected by the order have gone to considerable lengths to make alternative proposals. They share the feeling that they are not being fairly treated, but that they are being unjustly used to make up a hole in the Government's finances, being singled out merely by size. That is the kind of thing that people often describe as rough justice, but in my experience it is really injustice incorrectly described.

Customs and Excise may take the view that the largest firms have the broadest backs, on which such an injustice can more easily be laid, but in these recessionary times few large firms can easily bear unreasonable and additional burdens, or make tax payments for which they may not be liable and which amount to interest-free loans to the Government.

7.48 pm

Mr. Bob Cryer (Bradford, South)

The front page of the statutory instrument states: This Order supersedes S.I. 1992/1510 published on 2nd July 1992 and is being issued free of charge to all known recipients of that Statutory Instrument. That demonstrates a point that I made in respect of the previous order. The cost to the public of this legislation is absolutely outrageous. A couple of sheets of printing costs 55p, and a 50-page document can cost £10, £12 or £15. It is no excuse to advance the argument that a copy of legislation was too expensive to purchase. The Government do not allow any exemption because of cost.

The order has had a chequered career. It was originally tabled for debate on 7 July. On that day, the Select Committee on Statutory Instruments was also due to consider it. Hon. Members probably do not know that the Committee has a duty to report to the House whether a Minister is making unusual use of his powers, whether the order that he is presenting is within his powers or is ultra vires, whether the order is ambiguous and whether certain other criteria have been observed. The House, not the Committee, lays down those criteria. If the Committee is to report an instrument, the Department concerned must have an opportunity to defend its position.

It was clear that, if the Select Committee on Statutory Instruments decided, for instance, to take evidence and not to report the incident to the House on 7 July, the statutory instrument would, in effect, slide through. However, the Committee determined that, because certain parts of the original order were ultra vires, it should be reported to the House. Fortunately, we had a memorandum, and we decided not to take evidence.

Because the Government are producing so many statutory instruments, they are turning the House into a sausage machine. They are not allowing the Select and Joint Committees on Statutory Instruments adequate time in which to do their job properly and report fully to the House. I am pleased to say, however, that, because of the Select Committee's report, the Government decided to withdraw the original order. My hon. Friend the Member for Wrexham (Dr. Marek) alluded to the reasons for the report.

Articles 4, 5, 6, 11 and 14 of the original order were all prefaced by the words save as the Commissioners [of Customs and Excise] may otherwise allow". Nothing in the parent legislation allowed the commissioners that discretion. It was clearly a powerful discretion, for it allowed the commissioners to decide whether a person was subject to all the powers set out in those five articles; and it was not contained in the primary legislation. The Committee's view was that the discretions were ultra vires—that is, that they were not within the powers of the Minister.

Following advice from counsel, the Committee decided that another section of the order was ultra vires. The order imposed a duty to make advance payments on divisions of a corporate body; the primary legislation allowed such impositions to be made only on a corporate body—and divisions of a corporate body do not constitute corporate bodies. We considered that to be outside the Minister's powers, and accordingly reported it to be ultra vires.

I am pleased to tell the House that—as can be seen from the report that we have placed in the Vote Office—the order that we are debating has removed that discretion from the commissioners, thus conforming with the Value Added Tax Act 1983. Taxable persons are now regarded as corporate bodies, rather than as divisions of a corporate body: that, too, brings the order within the vires set out in the primary legislation.

On that occasion the Government behaved very sensibly, but that is not always the case. On other occasions, after the Committee has claimed that elements of similar orders were ultra vires, those orders have been tabled for discussion. In such instances, I have raised points of order, asking the Government to withdraw the orders and defer debate so that they could be examined with a view to tabling correct versions. The Government have simply pushed the instruments through the sausage machine, which is not good enough.

The Minister must accept the commendations of the House—although he may feel uncomfortable about doing so—for his sensible withdrawal of the order, and its retabling in a correct form. That should happen more often. If the Select and Joint Committees on Statutory Instruments are able to identify a vires point—a point relating to the powers of Ministers—there should be an automatic requirement for the House to see the Committee's report before any order is debated. In my view, nothing less than that will do. Sometimes, however, the Government simply press ahead when the Committee is about to report on a vires point, ignoring the work that it has done.

Let me add that the Select and Joint Committees are not the most televised parliamentary Committees. They are not a focus of great publicity; their business is a fairly dull routine, which is carried out in the public interest. That may sound precious, but it is true. I think that the Committees' work at least merits recognition by the House.

Dr. Marek

I entirely agree with my hon. Friend. Difficulties are likely to be caused for traders, however, by the withdrawal of that phrase from the order. I am beginning to wonder whether we should not proceed with the statutory instrument, and whether the original wording should be reintroduced. That could be done as part of our proceedings on next year's Finance Bill. I should be interested to know what my hon. Friend and the Minister think of that proposal.

Mr. Cryer

Delegated powers are conferred by primary legislation. If the primary legislation does not contain powers for the Minister to award discretion to the commissioners, he cannot award that discretion. If discretion is needed—this is a particularly onerous system, requiring advance payments; as has already been said, 1,600 companies will be affected—it is a requirement for primary legislation.

The Select and Joint Committees do not examine instruments on their merits—which, incidentally, makes it even more iniquitous that the Government should, at times, ignore the views of the Select Committee, which has a Conservative majority. It is not as though its members were seeking to undermine a Government policy on merit; they are simply carrying out the task allotted to them by Parliament, which specifically excludes debate on merit. My hon. Friend the Member for Wrexham has made a perfectly fair point, to which the Minister must reply. We must establish whether further primary legislation is required.

Customs and Excise has provided the explanation given to the Select Committee. It sets out the position fairly, explaining the original faults in the instrument, their recognition and their replacement by the new Value Added Tax (Payments on Account) (No. 2) Order, which takes those faults into account and—as far as the Committee is concerned—remedies them.

On the question of merit, if the order leads to companies having difficulty in making advance payments, the Government must take that into account. We are in the middle of a deep and, alas, deepening recession. I emphasise the dangers of making decisions about value added tax or other tax payments in the middle of a recession that would further exacerbate the recession.

I hope that other Government Departments will follow the example set by the Minister and his Department and make sure that the recommendations of the Select and Joint Committees on Statutory Instruments are taken into account before a debate is held. About 1,600 companies will be affected by the order. I repeat that the legislation that affects the vast majority of the British people is not primary legislation. That goes through the House in dramatic circumstances, with a crowded House for the Report stage and with great interest shown in the Standing Committee proceedings. The debates are lengthy. Delegated legislation generally goes through the House in an hour and a half.

We are not considering the majority of instruments—negative procedure instruments—that are not even debated yet frequently contain criminal sanctions. On this occasion we are, fortunately, able to deal with a corrected instrument, but on many occasions faulty legislation that was delegated to Ministers and their Departments to draft goes through the House without examination. That is an imposition on the British people. They have to implement the legislation, but they are often inhibited from going to court for a clarifying decision because of the expense. It is our fault if defective legislation leaves this place. It is not the fault of the people outside who have to implement it. Mercifully, on this occasion we have corrected the legislation.

I hope that the Minister will not mind my few words of approbation. His political career will, no doubt, suffer as a result. Other Ministers had better look out, therefore, for if I crucify them with praise they will have to look towards a dreaded occasion—unless they wish to avoid it by taking similar corrective action.

8.6 pm

Sir John Cope

The hon. Member for Bradford, South (Mr. Cryer) commended me both at the beginning and at the end of his speech. He need have no hesitation in doing so. I am delighted to accept any commendations from him that are on offer, because I know that he would condemn me if he thought that I was not doing the right thing at any point. He need not worry about my political career. I know that Whips have very short memories. I do not believe that there will be any difficulty in that respect, whatever happens to my career.

The debate provides me with the opportunity sincerely to commend the work of the Select Committee on Statutory Instruments. When I was in the Whips Office I came to know a little about its proceedings and how hard the hon. Gentleman in particular and his colleagues on the Committee work on behalf of the House. We had an exciting debate earlier this week about membership of some of the more glamorous Select Committees. I know, however, how difficult it sometimes is to get Members to serve on some of the less glamorous Committees, such as the Select Committee on Statutory Instruments, which does extremely important work on behalf of the House.

I agree with what the hon. Member for Wrexham (Dr. Marek) said—that in some respects it was unsatisfactory not to proceed with the first order. However, I considered it right not to do so, but to amend it in the light of the Select Committee's report. There is always legal doubt in these cases. I do not say that we were necessarily 100 per cent. convinced that the vires points raised by the Select Committee were exactly correct. Nevertheless, there was sufficient evidence to convince us that it would be right to redraft the statutory instruments and avoid a potential difficulty. That is what we have done by bringing the revised order before the House.

Therefore, the words that the hon. Member for Wrexham quoted— save as the Commissioners may allow"— have disappeared from the instrument and have been replaced with more precise wording to cover the two points that we were anxious to amend as a result of consultations since the Budget.

The hon. Member for Wrexham also asked me whether there would be any delay over deciding about the 80 per cent. rule that has been mentioned so many times. We shall do our best to avoid any delay. About 1,600 traders are involved in the scheme. The number of traders who will make applications in connection with the 80 per cent. rule is much smaller. I do not anticipate, therefore, that there will be a huge burden of work. I hope that we shall be able to deal expeditiously with the applications.

As the hon. Member for Wrexham acknowledged, the review will take place after we have gained some experience of working the scheme. We expect to consider how the scheme is working next spring or summer. The hon. Gentleman also asked me whether this provision will be reviewed if and when we move to an origin system of value added tax. It will, of course, need to be reconsidered at that time, but I cannot anticipate either when that will be or what the results of the review will be.

The hon. Member for Wrexham mentioned that representations had been made to him about the leaflets. In the light of the order, assuming that it is agreed tonight, we shall issue revised guidance as soon as possible.

Finally, the hon. Gentleman referred to the sixth directive and asked whether we were satisfied that we had authority under that directive to pursue the order. The answer is yes, we are satisfied that we have that authority. Any Minister will be concerned about technical arid legal matters. I am not a lawyer. There is bound to be slight concern, therefore, as to whether all its provisions can be upheld. We have received clear legal advice on the point, however, and I am in no doubt about it.

My hon. Friend the Member for Bristol, North-West (Mr. Stern) referred to the Danish solution, as he described it, to a similar problem. Denmark is one of the few countries in the European Community that has three-monthly returns. The time allowed for payment at the end of that period is one month and 20 days. That is 20 days longer than is allowed in the United Kingdom. The effect of the Danish system in shaving a few days off the time allowed for payment here creates no difficulty as it would in this country, where it would shorten, I think unacceptably. the time allowed for payment. That course is not therefore open to us.

My hon. Friend referred also to a legal opinion which we were told the day before yesterday is now on t he way and which casts doubt on the order in relation to article 101. We have considered that point. Without the benefit of the new legal opinion that was promised to us recently, our clear advice is that the order is in order in that respect. Although there has been a fairly long consultation period over the order, I cannot help but remark upon the fact that that legal opinion has been promised to us a day or two after the House rises for the summer recess.

The timing is obviously extremely difficult from our point of view. It is essential that the order is passed so that businesses know where they stand and we have time to make proper arrangements. Were we to hang on for a few days until we saw the promised new legal opinion, there would be a much greater effect on our ability to have the order approved by the House, with consequent disorganisation for Customs and Excise and for the traders involved.

Mr. Stern

Speaking as one chartered accountant to another, does my right hon. Friend agree that the delay in providing the legal opinion is only what one can expect from a lawyer?

Sir John Cope

My hon. Friend has made his point and I do not need to add to it.

The right hon. Member for Berwick-upon-Tweed (Mr. Beith) said that VAT money collected by firms is not the property of those firms. I agree with that and it is part of the rationale for the process.

The hon. Member for Bradford, South drew my attention to the cost of the order, or at least to the fact that it is free because it is a replacement. It is a complete replacement and the previous order is now of no value and can be thrown away.

There was a suggestion during the debate about monthly payments. The House will know that in some circumstances businesses can pay their VAT or send in their VAT returns monthly. Some seasonal traders have said that the one twelfth rule would be difficult for them because of the arithmetic workings and the seasonal nature of their trade. Customs and Excise will allow such businessses, upon application, to make their VAT returns and payments monthly as an alternative to quarterly returns with payments on account if it is judged to be right. It is for the businesses involved to consider that and to make an application if they think that it would be helpful.

Mr. Beith

The Minister quoted my observation that the money collected in VAT is not the property of the business but should be remitted. He omitted to refer to the other side of the coin, which is that money not collected in VAT and not yet returned through the normal business invoicing and terms of trade is not money that the business has to hand over. Therefore, the business is making an interest-free loan in circumstances that do not apply to the majority of traders. I hope that the Minister will continue to keep that in mind, because that is what this is all about.

Sir John Cope

As the right hon. Gentleman said, the order is all about cash flow. If we did not have the order, the Government's cash flow—the public sector borrowing requirement—would suffer considerably. There is no way in which we can reverse that painlessly for the businesses and place the Government in a position where their PSBR does not suffer. That is the underlying reason for introducing the order, and why I commend it to the House.

Question put and agreed to.

Resolved, That the Value Added Tax (Payments on Account) (No. 2) Order 1992 (S.I., 1992, No. 1668), dated 13th July 1992, a copy of which was laid before this House on 13th July, be approved.

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1. STATUTORY INSTRUMENTS, &c. 18 words
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1. DATA PROTECTION 51 words
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2. RIGHTS OF THE SUBJECT 28 words
2. PETITIONS
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1. Heywood Magistrates Court 156 words
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2. RN Stores Depot, Eaglescliffe 264 words