Value Added Tax (Hansard, 26 October 1979)

§ Mr Heddle
asked the Chancellor of the Exchequer whether he has held, or intends to hold, discussions with the Confederation of British Industry and Association of Independent Businesses and other bodies representing the small business sector and with Her Majesty's Customs and Excise with a view to extending the period of settlement of value added tax from one month to two; and if he will make a statement.

§ Mr. Peter Rees
Ministers have held no discussions on this matter and have no plans to do so.

§ Mr. David Atkinson
asked the Chancellor of the Exchequer what percentage of value added tax registered traders have a turnover of less than (a) £20,000 and (b) £50,000 a year; and what percentage of the total value added tax revenue they contributed.

§ Mr. Peter Rees
In 1977–78, about 40 per cent. of registered traders had taxable turnover less than £20,000 and about 70 per cent. less than £50,000. Traders with taxable turnover less than £20,000 who normally pay tax to Customs and Excise paid 2½ per cent. of gross payments and those with less than £50,000 paid 6 per cent. Traders with taxable 361W turnover less than £20,000 who normally claim repayments of tax received 4 per cent. of total repayments and those with less than £50,000 received 8½ per cent.

§ Mr. David Atkinson
asked the Chancellor of the Exchequer what would be estimated loss of revenue if the value added tax threshold limit were raised to (a) £20,000 and (b) £50,000 annual taxable turnover; and how many businesses would cease to be legally obliged to be registered for each figure.

§ Mr. Peter Rees
It is estimated that if the exemption limit was raised to £20,000 taxable turnover a year the revenue loss would be about £25 million in a full year. This is on the assumptions that (i) the de-registration limit was increased proportionately to the registration limit and (ii) the proportion de-registering of those eligible to do so was similar to the proportions when the limits were raised in October 1977 and April 1978.
Raising the limit to £50,000 a year would cause such a change in the nature of the tax that it is not possible to make a realistic estimate of the revenue loss.
It is estimated that about (a) 375,000 and (b) 700,000 persons respectively would cease to be under the legal obligation

Average MLR^* Average yield on long dated Government securities (20 years)† Wholesale price index‡ Retail price index‡

1970 7.23 9.25 7.1 6.4

1971 5.92 8.75 9.1 9.4

1972 5.91 8.90 5.3 7.1

1973 9.85 10.71 7.4 9.2

1974 11.94 14.77 22.6 16.1

1975 10.79 14.39 22.2 24.2

1976 11.77 14.43 17.3 16.5

1977 8.45 12.73 19.8 15.8

1978 9.12 12.48 9.1 8.2

^* Between 13 October 1972 and 25 May 1978 MLR was normally linked by formula to the average rate of discount for Treasury bills established at the weekly tender. Before and after that period it was set by administrative decision.

† Average of end month rates 1970–72, average of end week rates 1973–75 and average of daily rates 1976–78.

‡ Percentage increase on year earlier. Wholesale price index of output of all manufactured products.

Sources: Financial Statistics, Economic Trends.

	Average MLR^*	Average yield on long dated Government securities (20 years)†	Wholesale price index‡	Retail price index‡
1970	7.23	9.25	7.1	6.4
1971	5.92	8.75	9.1	9.4
1972	5.91	8.90	5.3	7.1
1973	9.85	10.71	7.4	9.2
1974	11.94	14.77	22.6	16.1
1975	10.79	14.39	22.2	24.2
1976	11.77	14.43	17.3	16.5
1977	8.45	12.73	19.8	15.8
1978	9.12	12.48	9.1	8.2
^* Between 13 October 1972 and 25 May 1978 MLR was normally linked by formula to the average rate of discount for Treasury bills established at the weekly tender. Before and after that period it was set by administrative decision.
† Average of end month rates 1970–72, average of end week rates 1973–75 and average of daily rates 1976–78.
‡ Percentage increase on year earlier. Wholesale price index of output of all manufactured products.