Value Added Tax

HC Deb 04 June 1996 vol 278 cc360-1W

Mr. Pearson

To ask the Chancellor of the Exchequer (1) what is the estimated cost to the Treasury in 1997–98 of moving to payments on account of one twenty-fourth of companies' VAT liabilities in accordance with the requirements of the Value Added Tax (Payment on Account) (Amendment) Order 1996; [30223]

(2) what is the estimated income to the Treasury in 1997–98 of removing the seven-day extension to the time for companies making VAT payments on account in accordance with the requirements of the Value Added Tax (Payment on Account) (Amendment) Order 1996. [30224]

Mr. Heathcoat-Amory

[holding answer 22 May 1996]: The effect on total VAT collected of the package of changes to the payments on account scheme is nil in 1997–98. There is however a cash flow gain to the Treasury of approximately £30 million from removing the seven-day extension to the time for companies making VAT payments on account. This is offset by a cash flow loss to the Treasury of approximately £65 million from moving to payments on account of one twenty-fourth of companies' VAT liabilities. There is therefore a net cash flow loss of £35 million.