ICAEW Slams Proposed Amendments To UK VAT Registration Forms

Mandy Robinson, Tax-news.com, London

20 March 2001

The Tax Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW) has slammed the amendments made to the VAT registration form, VAT1, arguing that the revised form would put a heavy burden on businesses by being too complex and confusing.

In a letter to UK Customs & Excise, who had invited the ICAEW to respond to the new form, the faculty raised a number of concerns and suggested that VAT1 be 'recast radically.' For a start, said the faculty, Customs is confusing two issues: 'the need to ensure that traders register properly for VAT and the need for Customs to obtain information about a particular business.'

Having assessed the proposed form, the faculty described many of its questions as 'ambiguous and likely to result in responses that are inconsistent even between similar businesses.' Futhermore, the faculty questions whether Customs has the authority to request some of the information being asked for, and if the form is compatible with the Human Rights Act 1998 and Data Protection Act 1998 requirements.

There are particular worries for new businesses which need official help to assist them in their first few weeks of operations - a critical time for them. What they do not need, argues the faculty, are 'draconian' forms that are 'out of all proportion to their requirements under the law.'

There is also the cost factor. The faculty estimates that it will take a professional adviser a number of hours to gather the information needed to complete the new form with a typical fee somewhere between £500 and £1,000.

The faculty concluded its letter with recommendations including the requirement that Customs should register traders by return of post on the basis of a simple form with the condition that all additional information should be sought at a later date. It also suggested that VAT1 be tailored to the legal entity being registered and there be separate forms drawn-up for companies, partnerships, unincorporated associations, limited liability partnerships, trusts and sole proprietors instead of one form for all. This would allow for fewer but better-targeted questions to be asked which should result in Customs receiving more information because all the questions are likely to be relevant ones. Finally the faculty pressed for VAT registration online via a secure portal to encourage prompt and convenient registration.

The full report can be downloaded in Word format from the Tax Faculty website at: http://www.taxfac.co.uk/facultypublications/documents/10-956-1.doc

Recommended