Clause 19
Finance (No. 2) Bill
2:15 pm
Mark Francois (Shadow Minister, Treasury; Rayleigh, Conservative)
I shall confine my remarks to the amendment, as I am keen not to prejudice the broader stand part debate on this rather important clause.
I have listened carefully to the argument that the hon. Member for Falmouth and Camborne (Julia Goldsworthy) made in favour of her amendment, but I am not convinced by it. The clause will give HMRC quite a strong power to impose the reverse charge procedure, which could be a useful weapon in the battle against missing trader intra-community fraud, but which will represent quite a change in VAT terms for those companies on which the order might be imposed.
The element of the clause in question effectively provides a safeguard for small businesses in particular by instituting a de minimis level below which the power should not apply. If it were deleted, the procedure could be imposed even on companies reclaiming a very modest amount of VAT. Indeed, some professional bodies have claimed that the threshold should be raised.
I am curious that the hon. Lady quoted from the Law Society. I read its brief; perhaps I read it slightly differently. It said:
“We appreciate that repeated transactions involving loss of VAT on supplies just below an increased threshold, e.g. £10,000 a month, would give rise to material losses of VAT. However, the aggregation provisions in the new section 55A(1)(d) enabling other supplies to be taken into account—e.g., if a customer has already received (on the current legislative proposals) supplies of £200, the new provisions will apply to other supplies which individually or in aggregate exceed £800—might suggest that a higher threshold could be adopted.”
Unless I completely misread that, the Law Society is saying that, if anything, the threshold should be higher, presumably because it would like the safeguard to be broader than it is.