Accounting software suppliers have vowed to stop work on euro-compliant VAT routines until they receive definitive tax guidance from Customs & Excise.
Around 40 members of the software trade body BASDA issued their warning to Customs officials at a meeting last Friday. John Moscrop, head of Customs’ EMU project team, acknowledged the suppliers’ concerns but made no undertaking to alter the ruling that companies which invoice in euros will still have to maintain records and file VAT returns in sterling.
So far, among suppliers in the UK, only Exchequer Software can handle this parallel currency requirement.
Peter Robertshaw, EMU roll-out manager for German supplier SAP, said the meeting was useful, ‘but didn’t go far enough – there are still some issues to sort out’. For example, Customs, which refused to comment, has yet to specify which exchange rates companies should use when converting euro invoices to sterling, he added.
‘Time is getting short before EMU. This isn’t the time for delay,’ said Robertshaw.
Kevin Carletti, senior manager of Ernst & Young’s financial services office, explained that companies which switched their accounting currency to euros could be at risk from exchange-rate fluctuations.
‘I can’t see Customs turning around tomorrow and saying you can account for VAT in euros,’ said Carletti. ‘If it receives VAT returns in euros, that shifts the exchange-rate risk and it might collect less tax. Customs will also have systems issues of its own coping with euros.’
FEE euro conference, page 10.
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