Call to Brown to end VAT confusion

The ACCA’s call to the chancellor to review the tax system comes after what it labelled a ‘succession of highly publicised cases, in which Customs & Excise has tried to define the complex VAT rules, at the taxpayers expense’.

One of these cases, involving Customs and high street retailer Marks & Spencer, has already been taken to the European Court of Justice. In this dispute, Customs is refusing to refund M&S Pounds 12m worth of VAT charged on teacakes, bottled water, biscuits and gift vouchers dating back to 1973.

Recently, in another dispute, Big Five firm Ernst & Young helped an automotive finance house win a precedent-setting dispute with Customs over a VAT bad debt relief claim.

Chas Roy-Chowdhury, ACCA’s head of taxation, said Gordon Brown needs to review the system with the UK’s European Union partners in order to develop a strategy for creating a ‘reformed and simplified VAT/Sales Tax system which does not stray back to present levels of complexity.’

He added: ‘It is not acceptable that UK businesses should have, both to meet high compliance costs in relation to VAT and to pay again to fight legal battles with Customs & Excise in the VAT minefield.’

A Customs spokesman said there were no plans to abolish VAT and defended the actions of the government department in its disputes with business over the tax. ‘We abide by the law and have a right to appeal,’ he added.

And in response to the accusation from ACCA that it often uses ‘blocking tactics to prevent business being reimbursed overpaid tax’ Customs invited anyone who has problems with regard to VAT to ‘come in and talk to us’.


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