ACCA Urges Gordon Brown To Scrap VAT

by Caroline Maxwell, Tax-News.com, London

13 November 2001

In the run-up to the Chancellor's pre-budget report, expected on November 27th, the Association of Chartered Certified Accountants (ACCA) has called for Gordon Brown to simplify the value added tax system, or to replace it with a sales levy, which would be paid only by the end consumer.

'It is unacceptable that UK businesses should have to pay high compliance costs and then pay all over again to fight legal battles with HM Customs and Excise because VAT law is so unclear,' explained Chas Roy-Chowdhury, the head of taxation at the ACCA. 'Gordon Brown needs to review the system with the UK's European Union partners in order to develop a coherent strategy for creating a reformed and simplified VAT/Sales tax system which does not stray back to present levels of complexity.'

According to the accounting industry body, even if a company wins their case against the tax authorities, the Customs and Excise department will often block repayment of overpaid tax, stating that it is impossible to reimburse the original customers who paid VAT.

However, there are doubts as to whether a simplification of the value added tax regime in the United Kingdom could take place, even with the support of the Chancellor. VAT collection is an important source of revenue for the European Union, and any change would be likely to cause controversy on a Europe-wide scale.

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