Cash Accounting (Hansard, 22 January 1998)

§ Mr. Fallon
To ask the Chancellor of the Exchequer what is his estimate of the number of extra audits likely to be conducted per annum as a result of the proposals announced by the Inland Revenue on 22 December to withdraw cash basis accounting for professional businesses; and what is his estimate of the average cost of such audits. [24290]

§ Dawn Primarolo
A change in the way a number of professional businesses calculate their taxable business profits would not increase the number of Inland Revenue self-assessment inquiries conducted per annum.

§ Mr. Fallon
To ask the Chancellor of the Exchequer what consultations he has held with the USA Internal 643W Revenue Service regarding the proposals announced by the Inland Revenue on 22 December to withdraw cash basis accounting for professional businesses. [24286]

§ Dawn Primarolo
None.

§ Mr. Fallon
To ask the Chancellor of the Exchequer (1) what percentage of businesses affected by the plan to withdraw cash basis accounting for professional businesses have fewer than(a) five, (b) 10 and (c) 20 partners; [24289]
(2) what is his estimate of the number of professional businesses that will be affected by the proposal to withdraw cash basis accounting for professional businesses, as announced by the Inland Revenue on 22 December; [24288]
(3) what is his estimate of the average extra tax burden faced by professional businesses as a result of the proposals announced by the Inland Revenue on 22 December to withdraw cash basis accounting for professional businesses; [24287]
(4) what is his estimate of the extra tax revenue that will be raised by the planned withdrawal of cash basis accounting for professional businesses, in financial years (i) 1999–2000, (ii) 2000–01 and (iii) 2001–02. [24285]

§ Dawn Primarolo
On 22 December 1997 I announced the intention to withdraw the cash basis practices for professionals but views were sought on the details of the proposal, such as the suggested method for "catching up". The tax effect of the withdrawal will depend on the terms of the final arrangements, which at present are under consultation.
No reliable information is available of the total number of businesses currently on the cash basis. The objective of withdrawing these practices for those that do currently use the cash basis is to level the playing field for all businesses.