Clause 22 - Disallowance of input tax where consideration not paid
Finance Bill
10:45 am
Mr Mark Hoban (Fareham, Conservative)
I welcome the simplification that the clause provides for. The Government were right to lift the burden on businesses to notify their customers about claiming bad debt relief and I welcome that. Like the hon. Member for Torridge and West Devon (Mr. Burnett), I am concerned about the six-month rule and the burden that it will place on business. My own experience as an auditor is that often the sheer volume of relatively low-value invoices, some of which may not have been paid, is an issue in business. If a business were obliged to go through and identify those invoices after six months, the task would have to be done on a daily or monthly basis. That would constitute an onerous burden, particularly for smaller businesses.
I wonder whether it would be more appropriate for smaller businesses to be asked to do this adjustment as part of their year-end accounting procedures, when businesses would normally examine their supply accounts and identify any unpaid invoices. The small business community would welcome that measure and see it as being in step with their own procedures. It would not require an additional compliance burden to be placed on them.
My second question is whether, for low-value invoices, a de minimis limit should be put in place so that the measures apply during the course of the year only when an invoice is for more than a particular value. Again, that would simplify matters for businesses of all sizes and prevent them from having to scroll through thousands of invoices on a regular basis.
I ask the Minister to consider further lifting the burden on small businesses by reconsidering the application of the rules. The Government often state
their commitment to lifting the regulatory burden. This would be a positive way of doing that and would demonstrate that their words were not empty.
I want to raise a further and slightly more technical point. Under the previous regime of having to notify customers that one had claimed bad debt relief, there was a concession for receivers of companies, who did not have to repay the input tax on certain debts. Will that concession remain, given the change to the regime outlined in clause 22?