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28/09/05
SIMPLIFYING VAT FOR SMALL BUSINESS
The British Chambers of Commerce (BCC) and HM Revenue and Customs (HMRC) today launch a new six-month campaign to raise awareness of VAT simplification schemes, as new research shows many businesses are simply unaware of the schemes available to make paying VAT easier.
A joint project was announced by Chancellor Gordon Brown in the 2005 Budget to identify awareness levels of VAT simplification schemes and design a campaign to help businesses make informed choices on the different schemes available. A survey of small firms showed over one third were unaware of VAT simplification schemes which could apply to them.
BCC Director General David Frost said: “Payment of taxes can cause headaches for businesses. Small firms in particular can find it difficult to calculate what taxes are due and when they must be paid. The various VAT simplification schemes on offer could help to make life a little easier for smaller firms. This campaign aims to raise awareness so that employers can decide whether there is a scheme out there that would benefit their business."
Paymaster General, Dawn Primarolo, said: “The VAT schemes provide additional flexibility in the tax system and give business a range of options for reducing the burden of VAT administration and payment. Greater use of the schemes can also play a part in encouraging the growth of enterprise in the UK and this new campaign is an excellent example of collaboration between government and industry for the benefit of small business."
The campaign will run for six months from September 2005 – access via www.chamberonline.co.uk or contact HMRC National Advice Service on 0845 010 9000.
ENDS
Simplification schemes on offer
- Flat rate scheme - VAT is calculated as a flat percentage of a firms' turnover, rather than them having to record and balance out all their inputs and outputs. The rate is determined by the trade sector within which the firm operates. The scheme cuts down on record keeping and can save time for participating businesses.
- Annual accounting scheme - Employers are only required to file one VAT return a year. Employers make 9 interim VAT payments at monthly intervals based on an estimate of the total VAT bill for the year, and then make a balancing payment when they submit their return. The scheme spreads your VAT payments evenly over the year and avoids the need to worry about VAT returns and payments every three months.
- Cash accounting scheme - VAT is calculated and paid on the basis of the payments an employer receives and makes, rather than on the invoices they issue and receive. This can improve cash flow, especially for businesses with late payers.
All of the above schemes can be used in any combination. To find out more visit: www.chamberonline.co.uk or contact HMRC National Advice Service on 0845 010 9000
Summary of results of survey of 150 small firms
General awareness of VAT simplification schemes provided by HMRC:
62% - Yes 38% - No
Awareness of scheme where one calculation of VAT due is made, based on a flat rate percentage of cash received (amongst businesses with a turnover of less than £150,000 a year):
48% - Yes 52% - No
Awareness of scheme where VAT payments are based on the cash received and spent rather than the invoices issued and received (amongst businesses with a turnover of less than £660,000 a year):
63% - Yes 37% - No
Awareness of scheme where just one VAT return is filed per year, paying monthly instalments and any balancing payment after submission on return (amongst businesses with a turnover of less than £660,000 a year):
41% - Yes 59% - No
Awareness of ability to use a combination of schemes to calculate and make VAT payments:
19% - Yes 81% - No
Media contacts
Jo Tanner
Media Manager
British Chambers of Commerce
Tel: 0207 654 5812 Mobile: 07793 893573
Email: j.tanner@britishchambers.org.uk
Robin Campbell-Burt
HM Revenue and Customs
National Media Relations - Business Desk
Tel: 020 7147 2324
Email: robin.campbell-burt@hmrc.gov.uk
Notes to Editors
The British Chambers of Commerce (BCC) is the authentic voice of British businesses. The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people. For more information visit: www.chamberonline.co.uk
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