Business slams BASDA

Leading UK companies have rejected claims by software trade body BASDA that accounting programs will not be able to cope with domestic VAT returns when they start invoicing in euros on 1 January 1999.

BASDA issued a statement last week that software developers would not be able to release VAT-compliant programs before EMU because Customs & Excise is insisting VAT returns be filed in sterling – even when companies raise invoices in the euro.

BASDA said businesses invoicing each other in euros would have to convert the total invoice amounts and VAT charges into sterling for their individual VAT returns. Because the exchange rate on the dates that the invoices were sent and received would be different, there could be exchange rate losses and gains, the association said.

‘No current VAT software is able to handle automatic dual currency VAT reporting in this way,’ said Dennis Keeling, BASDA’s chief executive.

The companies that would be affected by the VAT ruling were mainly UK subsidiaries of companies based in EMU member states, which are likely to change their base currency to the euro. But they will still have to maintain VAT records in sterling, said Keeling. But the multi-national companies that BASDA named in its statement all rejected the claim.

‘For us the euro will be a foreign currency just like the ones we already deal in,’ said Alastair MacDonald, corporate communications manager at the electronics company Siemens. He said the company’s existing software would be able to cope with the euro. And Harry Briggs, manager for government affairs at car manufacturer Rover, also named by BASDA, said that the company did not anticipate a problem.

‘Cynically speaking, BASDA has a vested interest in finding a computer problem to make its members rich,’ said Peter Everett, vice-chairman of ICI’s EMU steering group.

BASDA’s Keeling countered that the VAT issue was unlikely to be a sales ploy, since many suppliers would handle such upgrades as part of standard maintenance contracts.

The association was unhappy that Customs’ EMU unit had published the guidance without engaging in its usual consultation with BASDA. The two sides will meet to discuss the problem on 16 October.

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