Euro invoices threaten VAT return meltdown.
UK businesses dealing with the euro were warned this week that they could face a VAT reporting meltdown. Trade group BASDA revealed that it is to continue to lobby Customs & Excise in a bid to change the rules governing VAT on euro invoices in the UK. At present UK companies can submit returns to Companies House in euros, but the UK VAT authorities demand information in sterling. Companies issuing a euro invoice with VAT in sterling at the current rate, might find the rate has moved, and lose out on the conversion, BASDA chief executive said. ‘Euro-based organisations without the appropriate systems face an increased administrative burden, as well as high costs and complexity in compiling their VAT reports,’ it added. There are around 100,000 SMEs using the euro in the UK, but the number is rising. Any business using the euro as its base currency has to state VAT returns in sterling. Those using packages without this capability will have to manually compile sterling returns. Meanwhile, Bournemouth-based Exchequer Software has warned that most accountancy applications available cannot meet Customs & Excise’s regulations on VAT returns. ‘Most UK businesses are not competing in Europe on a level playing field,’ said Eduardo Loigorri, managing director at Exchequer Software. ‘Companies using the euro as a base currency are immediately at a disadvantage because of the extra paperwork required to meet Custom’s regulations.’