Taxman 'doing everything' to speed up VAT registration

HM Revenue and Customs is “doing everything possible” to reduce the time it takes to register new companies for VAT after it emerged complaints about delays have risen almost five-fold in the last year.

A new range of anti-fraud measures, including staff vetting each application more rigorously, is partly responsible for 35 per cent of applications in March and April missing the turnaround time of 21 days.

Responding to Freelance UK, Revenue & Customs downplayed the delays, despite acknowledging that complaints received between March and May 2006 have soared to 170 from 36, a year earlier.

“Although the level of complaints about delays in processing applications has risen compared with the previous year, this still represents a small percentage in relation to the number of applications handled,” a spokeswoman said on Friday.

“Revenue & Customs received over 50,000 applications to register in March and April 2006.”

Despite the reassurance, the Conservative Party claims the continuing delays could jeopardize the UK’s status as one of the world’s top locations to start-up and expand a business.

David Gauke, MP for South West Hertfordshire, told The Financial Times that the tax authority does not have enough staff to accommodate the influx of new anti-fraud procedures.

As a result, he claims that Customs “does not appear to be able to cope,” with the new emphasis on scrutinising VAT applications in a bid to target those who abuse the system for their own ends.

Officials at Revenue & Customs disagree. They told Freelance UK, “Increased resources have been deployed to speed up the process of verifying potentially suspect applications. HMRC is doing everything possible to reduce the impact on processing times without weakening its strategy to identify fraudsters.”

It is also the intention of the tax authority to treat all business fairly and equitably, though it is “not always possible” to identify which applications are fraudulent without applying a wide range of checks, they added.

Meanwhile, officials rejected claims that the delays would be negatively impacting small businesses, in turn suggesting the UK’s small business-friendly status was not at risk.

A spokeswoman said, “Registration for VAT is not an issue for many new businesses because of the high VAT threshold (currently £61,000) in the UK. Many new start-ups will not be affected by the current processing times for handling registration applications.”

However concern does still remain among the small business sector, given some individuals register their company to claim VAT back on business purchases. Others register for value added tax to ensure there business is more credible and ready for the unexpected, such as a future acquisition.

According to HMRC, the time taken to complete each application for VAT can be speeded up by individuals and businesses taking more care when filling in the relevant forms.

In a statement, it said, “Processing times are also affected by the level of complete and accurate applications. Currently about 70 per cent of all applications need to be followed up by VAT Registration processing staff in order to rectify errors on the application form or to obtain missing information.”


19th June 2006

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