§ Mr. Nicholas Wintertonasked the Chancellor of the Exchequer what steps he takes to prevent evasion of value added tax.
§ Mr. Bruce-GardyneThe main responsibility for preventing evasion lies with the national network of local VAT offices which seeks to ensure that businesses whose taxable turnover is above the registration threshold are registered and that once they are registered, they correctly declare their liability and remit any tax due. Control is exercised by visits to businesses to examine records and activities. The frequency and duration of visits depends on the size and complexity of the business and the results of computer checks on its periodic returns. Suspected evasion is investigated either by the local VAT offices, or by 23W specialist local investigation units, or by the national Investigation Division, depending on the complexity of the suspected fraud.
§ Mr. David Atkinsonasked the Chancellor of the Exchequer what would be the annual loss of revenue if the value added tax threshold were raised to an annual turnover of (a) £30,000, (b) £40,000 and (c) £50,000.
§ Mr. Bruce-GardyneIt is estimated that if the exemption limit was raised to £30,000 taxable turnover a year the revenue loss would be about £65 million in a full year. This is on the assumption that (i) the deregistration limit was also increased to £30,000 taxable turnover a year and (ii) the proportion deregistering of those eligible to do so was similar to the proportions when the limits were raised in the past. Raising the registration and deregistration limits for VAT to £30,000 could, however, cause such a change in the nature of the tax as to result in a substantially larger loss of revenue.
For the larger increases in (b) and (c) it is not possible to make a realistic estimate of the revenue loss.
§ Mr. David Atkinsonasked the Chancellor of the Exchequer how many businesses would be exempted from value added tax if he tax threshold were raised to an annual turnover of (a) £30,000, (b) £40,000 and (c) £50,000.
§ Mr. Bruce-GardyneIt is estimated that if the annual registration exemption limit for VAT were raised to £30,000, £40,000 or £50,000 about 300,000, 410,000 and 520,000 persons respectively would cease to be under a legal obligation to be registered.
§ Mr. David Atkinsonasked the Chancellor of the Exchequer what is the total number of businesses registered for value added tax.
§ Mr. Bruce-GardyneAbout 1.39 million persons are currently registered for VAT.
§ Mr. David Atkinsonasked the Chancellor of the Exchequer (1) what is the total cost of collecting and administering value added tax;
(2) if he will estimate the cost of collection and administration of value added tax for all value added tax registered businesses with an annual turnover of up to (a) £30,000, (b) £40,000 and (c) £50,000.
§ Mr. Bruce-GardyneThe total cost to Customs and Excise of collecting VAT in 1981–82 was about £144 million. Averaged over the whole of the registered trading population this works out at about £105 per registered person. No reliable information is available about the cost of administration related to different categories of businesses; but the cost of collecting VAT from a small firm is believed to be less than the average for all businesses.
§ Mr. David Atkinsonasked the Chancellor of the Exchequer what are the restrictions which now exist on the member states of the European Community on establishing their own level of tax threshold for value added tax.
§ Mr. Bruce-GardyneArticle 24.2(c) of the EC Sixth Directive on VAT restricts increases in the registration exemption limit to those which
maintain its value in real terms".