HC Deb 13 July 1988 vol 137 cc196-7W
Mr. William Powell

To ask the Chancellor of the Exchequer if he has any plans to review the default surcharge and the effect it has had on the receipts of value added tax; and if he will make a statement.

Mr. Lilley

The Government, in accordance with the announcement in May 1986 in their White Paper—"Building Businesses … Not Barriers"—reviewed the operation of the default surcharge provisions before the 1988 Budget.

It was apparent from that review that the default surcharge had not been in operation long enough for significant conclusions to be drawn. A further review of the impact and operation of the surcharge is now to be made and trade and other interested bodies are invited to contribute.

Contributions should be sent to:

  • HM Customs and Excise
  • VAT Control Division B2
  • 11th Floor
  • Alexander House
  • 21 Victoria Avenue
  • SOUTHEND ON SEA
  • Essex
  • SS99 1AH

Mr. Charles Wardle

To ask the Chancellor of the Exchequer if he has any plans to review the rules for relief from value added tax on bad debts; and if he will make a statement.

Mr. Lilley

The Government announced in May 1986 in their White Paper—"Building Businesses … Not Barriers"—that a review of the arrangements for value added tax relief on bad debts would take place within two years. That review has now begun and trade and other interested bodies are invited to contribute.

Contributions should be forwarded to:

  • HM Customs and Excise
  • VAT Control Division C2
  • St. John's House
  • Merton Road
  • BOOTLE
  • Merseyside
  • L20 3NN

Mr. Baldry

To ask the Chancellor of the Exchequer whether the proposed penalty for persistent value added tax misdeclaration will be applied automatically; and if he will make a statement.

Mr. Lilley

This new penalty provision replaces the previous automatic third test for the serious misdeclaration penalty provided for in section 14 of the Finance Act 1985. It will not be automatically applied. When the thresholds of £100 or 1 per cent. are exceeded Customs will first consider whether the nature of the errors justifies the issue of a warning letter, or the imposition of a penalty. In no circumstances will a penalty be imposed without the case first being referred to Customs' head office. It will only be imposed on the most careless traders who persist in making significant errors even after receiving a formal written warning. The application of this new penalty will be closely monitored and kept under review.