PracticePeople In PracticeEMU – Exchequer calls for clearer VAT guidance

EMU - Exchequer calls for clearer VAT guidance

One of the only developers able to meet current Customs & Excise VAT rules – that VAT records be maintained in sterling, even if the company issues invoices in euros – has called for a clearer definition of ‘EMU compliant’ to address the UK’s unique situation, writes John Stokdyk.

Following software trade association BASDA’s warning that the Customs rules could cause chaos, Exchequer Software pointed out that its accounting program has coped with parallel-currency VAT accounting for five years.

A German customer had encountered the same currency problem in 1992, and asked Exchequer to adapt its code to handle it.

The Exchequer managing director Eduardo Liogorri, explained that, according to current guidelines, the audited records to back up VAT returns must show the exchange rates and calculations used. ‘On that basis, the euro is not something new to Customs.’

BASDA has developed a detailed specification for EMU-compliant accounting software, which will be used by the Dutch branch of Ernst & Young to test and certify whether software meets the basic multi-currency conversion requirements of EMU.

Liogorri said the BASDA software specification was valid, but urged the association and E&Y to develop more guidance for UK suppliers, who have to cater for anomalies resulting from its decision not to join the first wave of EMU.

Customs has agreed to meet BASDA tomorrow to discuss the euro VAT invoice issue, but is unlikely to change its stance.

‘Technical software issues should not determine commercial legislation,’ said Liogorri. ‘Customs should stick with what they said, but should make the rules surrounding multicurrency reporting more widely known – both to the public and within VAT offices.’

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