Budget 09: Darling sneaks in VAT clause

Budget 09: Darling sneaks in VAT clause

Post-election rise feared after clause is discovered allowing the standard rate of VAT to be temporarily altered for periods of less than 12 months

Chancellor Alistair Darling used the Budget to lay groundwork for legislation
allowing the standard rate of VAT to be temporarily altered for periods of less
than 12 months.

The change prompted speculation he might make large rate rises in future.

Lorraine Parkin, partner of tax services – VAT at Grant Thornton, said the
move would enable the government to make significant rises after the next
general election when it would be less damaging to Labour’s election prospects.

‘If they went all the way to the maximum of 25% this would net around £16bn –
money that would certainly help Mr Darling pursue his policy of continued
investment in the economy,’ she said.

Treasury figures reveal the Exchequer expects to receive VAT estimated at
£64bn in 2009/10. Parkin said, if tax revenues were to remain static in 2010/11,
a six-month hike in the VAT rate to 20% post-election, would net the Treasury
around £5bn.

A Treasury spokesman would not comment on future tax rises, but said ‘all
taxes are kept under review at all times’.

The standard rate of tax was reduced in last year’s pre Budget report cut
from 17.5% to 15%. The cut will be effective for only 12 months and on current
policy will end on 31 December this year.

The chancellor reveale he expected the Uk economy to return to growth by the
end of this year though overall it will shrink by 3.5% in 2009. Darling
predicted GDP growth of 1.25% in 2010.

Comment:

Budget
09: It’s a confidence game…but the chancellor didn’t show

Thanks,
Darling, for the British Sarbox

Alice
in Wonderland estimates

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