February Newsletter from Avenue Business Services
Colin Bielckus
Outsourced FD, mentor and business coach at The Outsourced Finance Director
The Chartered Institute of Taxation (CIOT) has urged the government to review unfair tax rules as interest rates on late payments rise. It has called for the reintroduction of rules that would allow HMRC to waive interest on underpaid VAT in cases where no actual tax loss to the Exchequer occurred.
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CIOT calls on government to rewrite unfair VAT rules
The CIOT is calling on the government to address unfair tax rules as interest rates on late payments rise.
The CIOT is urging the government to reintroduce rules which enable HMRC to waive interest on underpaid VAT when no actual tax loss to the Exchequer occurs.
This power was omitted from the new VAT interest regime which came into effect for VAT return periods starting on or after 1 January 2023.
The exposure to interest where there is no tax loss is due to the unique operation of the VAT regime.
The interest rate on late payment of tax is due to increase by a further 1.5% in April, with no equivalent increase in interest on overpaid tax.
Richard Wild, CIOT's Head of Tax Technical, said: 'It is possible for a taxpayer to under-declare an amount of VAT due to HMRC, in circumstances where that VAT is reclaimable by a third party, such as the taxpayer's customer.
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