§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what factors underlay his decisions(a) to allow taxpayers three years to reclaim wrongly paid VAT and (b) to allow Customs and Excise to reclaim errors for six years. [2578]
§ Mr. OppenheimThe Government have become increasingly concerned at the large amounts of revenue at risk in taxation boundary disputes and it is not in the public interest that the Exchequer remains open to large retrospective claims, in some cases back to the introduction of VAT in 1973. The proposed three-year limit will introduce more certainty and achieves a reasonable balance between the rights of individual taxpayers and taxpayers at large. It is proportionate in effect because, at the time the transactions in question took place, both businesses and their customers will normally have worked on the assumption that tax was due.
There are no proposals to change the six-year limit Customs currently has under its powers to assess for underpaid VAT. A six-year period for assessment is necessary to recover tax underpaid through one-sided error or carelessness and to deter non-compliance with the rules by business.
§ Mr. SalmondTo ask the Chancellor of the Exchequer (1) what action Her Majesty's Customs and Excise has taken in respect of the new rules on the limitation of VAT claims announced on 18 July; and if he will make a statement; [2680]
(2) what discussions he has had with the European Commission concerning the legality of the Government's recently announced changes to the rules for reclaiming VAT; and if he will make a statement. [2682]
§ Mr. Oppenheim[holding answer 6 November 1996]: Following the announcement on 18 July by the then Paymaster General that, subject to parliamentary approval as part of the Budget process, a three-year time limit on refunds of overpaid VAT, and other indirect taxes, was to be introduced immediately, Customs and Excise has deferred payments of refunds which are more than three years old.
Customs and Excise officials recently met representatives of the European Commission to discuss the proposals for limiting refunds of overpaid VAT and other indirect taxes. The Commission noted the United Kingdom's position.
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§ Mr. SalmondTo ask the Chancellor of the Exchequer what estimate he has made of the total amount due for repayment in respect of VAT incorrectly paid to Her Majesty's Customs and Excise with respect to company cars on the basis of(a) a three-year limit on reclaims, (b) a six-year limit on reclaims and (c) payment made only in respect of claims already made; and if he will make a statement. [2681]
§ Mr. Oppenheim[holding answer 6 November 1996]: The High Court found in the appeals of Royscot Leasing Ltd. and Royscot Industrial Leasing Ltd., Allied Domecq plc and T. C. Harrison Group Ltd. that the relevant UK law restricting VAT input tax recovery on company cars is permitted by the EC sixth VAT directive, contrary to the appellants' contentions. No VAT has therefore been incorrectly paid to Her Majesty's Customs and Excise with respect to company cars.