In order to ease the costly and time-consuming burden, the FPB has suggested the following changes be put in place:
Rather than the legal requirement to issue invoices within 14 days, businesses should be given 30 days to issue invoices during December, which would provide a small amount of breathing space for them to get to grips with the new rates.
- HMRC should publish detailed explanations of the changes to the flat rate VAT scheme in order to reassure businesses that the cut is being passed on.
- A ‘light touch’ should be applied to businesses which make genuine errors in their VAT returns over the period of the VAT cut from 1 December 2008 to 1 January 2010.
- The time limit for issuing credit notes should be increased from 14 to 45 days to provide time to adjust to the new rates.
HMRC must increase the profile of the new helpline available to struggling businesses. Firms may now contact the Business Payment Support Service to arrange a deferral of tax payment and penalties for late payments will not be charged. Many firms are not yet aware of this new service and should call 0845 302 1435 for assistance.
Businesses should be able to easily access detailed information from HMRC’s website about how the changes will affect their business and the guidance on the Cash Accounting Scheme should be amended to reflect changes.
The FPB’s VAT expert, Andrew Needham, made these representations to HMRC. "Revenue & Customs was open to my suggestions and said that it would consider and make any changes within its power to assist small firms at this difficult time. I am confident that we have convinced it to make some small changes which will provide some relief to our members."
The FPB’s Member Helpline can provide free advice on the VAT changes and how they will affect businesses. Members can call 0845 130 1722 to speak to one of our Member Service Representatives.