Compound interest and the taxman

Compound interest and the taxman

Reports today suggest the taxman is terrified of hundreds of claims appearing at the High Court seeking compound interest on over-charged VAT (click here).
A recent case forced HMRC to pay out interest in this way, instead of a flat rate, but it now appears, according to reports, as many as 300 other claims have emerged and threaten to blow a hole in the public finances.
I have to say see it seems a like a stretch to see it as a massive hole.
The projected take on VAT for 2009-10, according to Treasury figures, is around £64bn. To put a material dent in that, the compound interest claims would have to amass to more than a billion for it to be significantly worrying. Even then it would still be less than 2 percent of the total. Even if some of the cases go back years, it’s hard to see how the total cost could get to that level. Many claims will fail and others may prove much lower sums than the claimants may first have believed.
Annoying and difficult, but the taxman has faced much bigger threats and seen them through. These claims rarely prove as damaging as many first believe.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource