HMRC urged to support small firms during VAT change

2 December 2008

HM Revenue and Customs (HMRC) has been asked to make changes to the VAT system in order to help smaller businesses cope with the introduction of the new 15 per cent standard rate.

The Forum of Private Business (FPB) met with representatives of HMRC to discuss some of the administrative problems small firms are encountering in managing the switch to the lower rate of VAT.

The FPB put forward a number of recommendations designed to ease the costs and time involved in implementing the reduced rate.

These included giving businesses 30 days to issue invoices during December rather than the legal requirement to issue invoices within 14 days, and increasing the time limit for issuing credit notes from 14 to 45 days to provide time to adjust to the new rates.

HMRC was asked to publish detailed explanations of the changes to the flat rate VAT scheme in order to reassure businesses that the cut is being passed on.

The FPB said that a ‘light touch’ should be applied to businesses that make genuine errors in their VAT returns over the period of the VAT cut from 1 December 2008 to 31 December 2009.

The business group also argued the case for doing more to publicise the new HMRC helpline for firms that are struggling to make VAT payments. The FPB said that many businesses are not yet aware of this new service and should call 0845 302 1435 for assistance.

Andrew Needham, the FPB’s VAT expert, attended the meeting with HMRC: “Revenue & Customs was open to my suggestions and said that it would consider and make any changes within its power to assist small firms at this difficult time. I am confident that we have convinced it to make some small changes which will provide some relief to our members.”