Clause 22 - Disallowance of input tax where consideration not paid
Finance Bill
10:45 am
Mr Mark Field (Cities of London and Westminster, Conservative)
I, too, want to speak briefly to the clause. I share the concerns expressed by my hon. Friend the Member for Fareham (Mr. Hoban) and the hon. Member for Torridge and West Devon about the risk that a more onerous compliance burden will be put on taxpayers. Speaking from experience, I know that nothing is more frustrating than looking at an invoice that has been unpaid for many months and realising, especially if it includes a large chunk of VAT, that one has already paid out on it although one has been unable to recover. The worry is that the invoice will become a fully-fledged bad debt further down the line. There is a risk that small business folk will be wary about throwing good money after bad in taking such matters forward if more and more paperwork is required. That applies particularly to small business people who are not well acquainted with financial auditing and who may have to get someone who runs their payroll to go through the whole rigmarole of engaging in correspondence with the Revenue or Customs and Excise to get the money back. Despite those concerns, the proposals in the clause are to be supported in principle.
I agree with the technical comments made by my hon. Friend the Member for Fareham. An overhaul of liquidation is required. I know that much is being made about the proposed abolition of Crown preference in the Enterprise Bill, which will supposedly save small businesses between £70 million and £100 million a year. I should be interested to have some idea of whether that windfall will apply also to bad debts, where a fully-fledged liquidation is not in place.