TaxPersonal TaxVAT crackdown on high street stores

VAT crackdown on high street stores

Customs & Excise is to launch a crackdown on major high street retailers for using what it sees as an 'artificial' VAT avoidance scheme when dealing with credit transactions.

Many stores charge a ‘handling fee’ on credit transactions which they claim is VAT exempt.

Customs insists the fee is only notional because there is no discount for cash paying customers.

Paymaster general Dawn Primarolo said: ‘If left unchallenged this sort of scheme allows large companies to undercut small business rivals by hundreds of millions of pounds and means less money from VAT for schools and hospitals.’

Customs expects to test the issue in the courts and says accountancy firms are responsible for the ‘handling fee’ scheme through advice to clients.

PrcewaterhouseCoopers said it had advised clients to use the scheme but said it believed it was ‘within the existing legal framework’.

And PwC critiscised the way in which the government department was dealing with the issue.

‘We would only advise retailers on this basis. If Customs wish to challenge the legality of such arrangements, we would suggest the place to do this is in the courts, not in the press,’ said a spokesman.

Related Articles

Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

Personal Tax Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

3w Alia Shoaib, Reporter
Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

2m Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

4m Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

5m Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

6m Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

7m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

8m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

9m Alia Shoaib, Reporter