HC Deb 16 April 1985 vol 77 cc147-9W
Mr. Hargreaves

asked the Chancellor of the Exchequer what is the estimated amount of value added tax received from improvement/repair work on residences in each of the past 10 years.

Mr. Hayhoe

Estimates are as follows:

£ million
1975 90
1976 100
1977 115

£ million
1978 125
*1979 220
1980 345
1981 380
1982 425
1983 485
†1984 660
Notes:
* Standard rate of VAT increased from 8 per cent. to 15 per cent. on 18 June 1979.
† VAT at standard rate imposed on alterations, which were previously zero-rated, from 1 June 1984.

Mr. Coombs

asked the Chancellor of the Exchequer if he will list all significant changes from the exposure clauses published in the autumn of 1984 which he has made in his Finance Bill proposals for implementation of the recommendations about value added tax in the Keith committee report.

Mr. Hayhoe

I have decided, in the light of representations made by interested parties and comments from a number of hon. Members, that the following changes to the exposure clauses should be embodied in the Finance Bill, together with a number of other minor modifications of draftingExposure Clause 2 (Finance Bill Clause 12) As specifically proposed by the Keith committee, provision is now made for statutory cover to safeguard the admissibility of induced evidence, along the lines of S105 Taxes Management Act 1970. Exposure Clause 3 (Finance Bill Clause 13)

  1. (a) Provision is now made for a statutory defence of due diligence and reasonable excuse, on the basis that the taxpayer will not be liable to penalty under the clause if he satifies the Commissioners of Customs and Excise, or on appeal a VAT tribunal, that he had exercised all due diligence and there was a reasonable excuse for the conduct in question.
  2. (b) Provision is also made that a taxpayer will not be liable to penalty under the clause if, at a time when he had no reason to believe that inquiries were being made into his VAT affairs by Her Majesty's Customs and Excise, he furnished them with full information about the understatement or incorrect payment concerned.
  3. (c) The trigger points for penalty under the three objective arithmetical tests are to be tripled, to 30 per cent., £3,000 or 1.5 per cent. and 15 per cent., respectively.
  4. (d) Where an assessment made by Her Majesty's Customs and Excise in the absence of a return understates the true VAT liability by an amount which would otherwise attract serious misdeclaration penalty, the taxpayer is to be allowed a period of 30 days from the date of the assessment to take all reasonable steps to draw the underassessment to the attention of Customs and Excise, before liability to penalty arises.
  5. (e) Provision is now made that liability to a penalty under the clause in respect of an overpayment made to the taxpayer will only arise in consequence of sums actually claimed by him on VAT returns.
Exposure Clause 4 (Finance Bill Clause 14)
  1. (a) Appropriate provision is now made for a statutory defence of due diligence and reasonable excuse.
  2. (b) Where the fixed element of the penalty under the clause is increased by Treasury order, the increased amount will now apply to failures to comply which continued after the date of the increase.
 Exposure Clause 5 (Finance Bill Clause 15)
  1. (a) Appropriate provision is now made for a statutory defence of due diligence and reasonable excuse.
    2. 149
  2. (b) Provision is now made to allow, subject to safeguards, the temporary removal and use by the taxpayer of assets distrained for outstanding VAT debts and held subject to a walking possession agreement.
 Exposure Clause 6 (Finance Bill Clause 16) Appropriate provision is now made for a statutory defence of due diligence and reasonable excuse. Exposure Clause 8 (Finance Bill Clause 18)
  1. (a) Appropriate provision is now made for a statutory defence of due diligence and reasonable excuse.
  2. (b) The objective conditions for liability to default surcharge and for release from a surcharge liability notice are to be relaxed in order to target more closely on the most persistent defaulters. The new requirement is two defaults in one year, rather than two years, to trigger a surcharge liability notice. Similarly, a notice will expire after one year clear of all defaults, rather than two years.
  3. (c) The proposed extension of liability to surcharge, from the taxpayer to those carrying on his business in a representative capacity, is now withdrawn.
Exposure Clause 9 (Finance Bill Clause 19) Repayment supplement is now to be made available after a reckonable delay of 30 rather than 60 days. Exposure Clause 11 No such clause is to be included in this year's Finance Bill for the reasons given in reply to my hon. Friend the Member for Croydon, South (Sir W. Clark) on 15 April. Exposure Clause 12 (Finance Bill Clause 21)
  1. (a) The time limit after final determination of the tax concerned for assessing tax-geared penalties, interest or surcharges is to be reduced from three years to two years.
  2. (b) The grounds for allowing Her Majesty's Customs and Excise to make assessments of VAT going back more than six years are now narrowed to exclude cases of "serious misdeclaration".
 Exposure Clause 18 (Finance Bill Clause 27) Express statutory provision is now made that in respect of the qualifying elements for liability to penalty under exposure clause 2 (object of evading VAT and conduct involving an element of dishonesty) the burden of proof in an appeal against the assessment of such a penalty shall lie upon the Commissioners of Customs and Excise. Exposure Clause 20 (Finance Bill Clause 29) The clause now extends to cover awards of costs in those hearings, for example, in registration cases, where there is no amount of tax to confirm or vary. Exposure Clause 21 (Finance Bill Clause 30) The clause now extends to embrace companies subject to an administration order, to reflect the new provision and terminology being introduced by the Insolvency Bill. Exposure Clause 22 (Finance Bill Clause 32) In order to take account of the cash flow advantages which VAT confers on most businesses, the interpretation clause now makes it clear that insufficiency of funds to pay any tax due does not constitute a reasonable excuse for any of the defaults introduced by the Finance Bill.