HC Deb 19 December 1989 vol 164 c178W
Mr. Simon Coombs

To ask the Chancellor of the Exchequer what compensatory payments Customs and Excise make to traders when a court or value added tax tribunal has decided that value added tax was incorrectly charged.

Mr. Ryder

Section 40(4) of the Value Added Tax Act 1983 provides that, when a tribunal decides that VAT should not have been charged by Customs, a compensatory payment of interest should be made in addition to repayment of the tax itself. Interest is also payable by order of a court. In cases analogous with those where such a finding has been reached, Customs make ex gratia payments in lieu of interest.

All of these payments fall as a charge on subhead B1 of class XIX vote 2. A recent case where the House of Lords found against Customs is considered to be applicable to a substantial number of similar cases in which Customs had previously refused full repayment. As a result, some significant costs will be incurred in 1989–90. These costs are currently being assessed and will be reflected in a spring Supplementary Estimate which will be presented to Parliament.

Ms. Walley

To ask the Chancellor of the Exchequer how many letters have been sent out from value added tax headquarters at Southend in the current year and in each of the last two years to value added tax defaulters threatening surcharge in respect of payments which related to taxpayers who were(a) less than three days late with their returns, (b) less than seven days late with their returns and (c) less than 14 days late with their returns; and if he will estimate the cost of this administrative action.

Mr. Ryder

A trader is sent a notice warning of liability to default surcharge when value added tax returns or payments have been received late but records are not available in a form which enables me to provide the information requested.