§ Mrs. RocheTo ask the Chancellor of the Exchequer what plans he has to ensure that VAT penalties are levied on small businesses only where there is not a reasonable excuse for late or incorrect payments. [38900]
§ Mrs. Angela KnightThe VAT civil penalties for late or incomplete payment and for inaccurate returns are default surcharge and misdeclaration penalty respectively. Existing legislation provides that neither penalty is imposed where a business, of whatever size, has a reasonable excuse. Insufficiency funds, reliance on a third party or dilatoriness or inaccuracy on the part of any person relied upon are specifically excluded by law from qualifying as a reasonable excuse. However the cash accounting threshold of £350,000 whereby many small businesses pay VAT only when it is paid to them is of considerable benefit to small businesses.