§ Mr. BeithTo ask the Chancellor of the Exchequer (1) what estimates he has of the increased yield in VAT in 1992–93 as a result of the change he announced on 21 October for the payment of VAT by larger businesses from a quarterly payment system to a monthly system;
(2) what estimates he has of the reduction in yield from VAT in 1992–93 as a result of the change he announced on 21 October 1991 in the collection of VAT on imported goods to the system of postponed accounting.
§ Mrs. Gillian ShephardMoving the larger VAT payers from quartely to monthly reporting in the autumn of 1992 will create an estimated once-off cash flow gain to the Exchequer in 1992–93 of about £1½ billion, although the precise effect is difficult to predict since it will depend on larger payers' tax liabilities in 1992–93.
Requiring traders to account for VAT on EC imports on their normal domestic VAT return from 1 January 1993, instead of monthly at importation as at present, will subsequently produce a once-off cash flow loss to the 372W Exchequer in 1992–93 of about £1½ billion. Again, the precise effect is uncertain as it will depend on the pattern and terms of trade in 1992–93.
Had the Government introduced postponed accounting for EC imports in isolation the cash flow loss to the Exchequer in 1992–93 would have been about £2 billion. The cost would be more because all the VAT on imports would be paid quarterly, but the effect of introducing monthly returns first is that some VAT on imports—that of the largest payers—is paid monthly, rather than quarterly, under postponed accounting.