Is Cameron's VAT plan legal?

samueltc

More evidence of the novice issue? Lets hope not

Simon Cawkwell

Whether the plan is legal or not, it suffers from the more obvious drawback of being lunatic. As anybody with even the faintest idea of small businesses in practice will confirm, the administrative chaos generated by this scheme would be serious, unending and impossible to tidy up.

Seasurfer1

No need to defer VAT- as it has to be paid- just give the 2% back in Corporation Tax!
Get rid of the bands of red tape!
Fraser you did not agree with me on the comeback of Keynesian Policy - What is the Chancellor proposing- Mass Public Expenditure.

The Huntsman

"Or perhaps Tory policymakers are not as aware as they should be of the way the EU now ties the hands of British governments."

if Lisbon is ever implemented, the inability of a British Government to govern for its people and in the interest of the United Kingdom will be even more apparent than it is now. Perhaps having this idea declared unlawful will open the eyes of all Tories (not just those of us who have been saying this for years) to the extent to which power has been heedlessly and recklessly surrendered to people who are not in the least bit accountable to the British electorate and who care not a fig for the interests of the British people.

If so, we might see a bit of steel being put in Cameron's back over the issue of the EU and our relationship with it.

I am not holding my breath, however.

ChrisD

Fraser, is it going to be that much of a problem after the last couple of weeks? We have just been watching the members of the EU tearing up the rule book because of the extraordinary economic times we live in.

I fully expect to see other countries within the EU tearing up/rewriting the rules on various financial and taxation directives over the next couple of years as they try to guide their individual countries through this recession.

Its turning out to be a very sharp and nasty recession, and if this Conservative proposal is seen as a good one, expect it to be adopted by other EU members.
Rules are there to be broken if the benefits out weigh the negatives...

TGF UKIP

Now come on, Fraser, tell us what you really think - "Oh dear, just more of the sloppy, gimmicky Dave we've come to know so well."

Herbert Thornton

It seems highly unlikely that he's thought this through, unless perhaps he's quietly intending to adopt the BNP policy of leaving the EU - which seems even more unlikely.

Diablo

Sod the EU, Fraser! This is exactly why we need to renegotiate our relationship with this morally and financially bankrupt organisation.

But that's the real point you were trying to make, wasn't it?

Verity

Let us get rid of the nightmare notion that there is a "European law" by getting the hell out. That whirrrrr you hear in the background is our dear ancestors turning in their graves for what they sacrificed for us.

4ntarctic

If Cameron is planning to challenge the EU, perhaps it will do well for his popularity.

Tim Hedges

Blair's problem was that he was only allowed two different rates and zero was one of them. But you can, I think, chnge the level at whcih it is payable: here in Italy VAT is payable by all companies whereas in Britain it is those with a turnover of more than £60,000 (?). this could be raised presumably to £500,000, but many will opt to continue registered so they can claim back what they pay.Reducing it to zero only really helps service companies.

AndrewP

He's not proposing a change in rate - merely in the length of time taken to pay. I don't see a problem with that.

Alex R

Think you give them too much credit. Willing to bet that they didn't even consider EU legislation when divising this policy.

Henry Rogers

Fraser,
You may have answered your own question. Salami slicing can work both ways. Could be quite popular issues in the 2014 election.

Ray

This is exactly the kind of encounter that Cameron will need to steel himself to fight if he enters No. 10.

It is part of the bigger question that he will need to ask the British people: namely, who do you want running Britain - a democratically-elected government at Westminster? Or an undemocratic superstate in Brussels of which your country is viewed as merely a distant province?

Rhoda Klapp

This is the kind of post you'd see at eureferendum. In fact, the story was there first. However, good stuff, good points. Can we expect a reply from Tory cloud cuckoo land?

Andrew Spencer

This is precisely the sort of pragmatic Eurosceptism that Cameron should be trying to position the Tories as representing. The prescriptive one-size-fits-all attitude of the EU needs to be taken on in areas which people understand and can be shown to be of benefit if we take on the EU.

Mike, Brighton

Sadly I doubt it's been thought through by Cameron and co.
Sadly I also doubt that he will stick two fingers up at the EU (much as I wish he would).
Oh well, back to the drawing board!

Travis Bickle

Like the French or Spanish would give a moment's thought whether it was illegal if they needed to do it to boost their own economy.

As you say about bloody time we started playing the game properly in the EU and stopped worrying about doing everything by the book.

Faceless Bureaucrat

"Again, I’m all in favour of sticking two fingers up to EU laws which a democratically-elected British government considers not in the interests of the country. If Cameron is planning such a fight with Brussels, all power to him. I just hope he’s thought this through."

I suspect Cameron has indeed thought it through - what better weapon to now introduce into the fray and move the agenda…

The average voter may not be able to plug-in to talk of Derivates and PSB figures, but they sure as hell understand SMEs going under and jobs being lost 'because of Brussels'

For sure, danger of ‘old wounds’ being opened in the Conservative Party, but if Cameron can hold his nerve and keep the Party on-side during this period, what better way to neutralise Mandy, the embodiment of the EU in the UK?...

Dave B

"Cameron’s admirable plans to abolish school expulsion tribunals. It would be immediately sent to Strasbourg as it would violate Article Six of the ECHR (right to a fair trial)."

Are you sure about that? I don't see how school expulsion involves the criminal justice system.

Matt

"Can we expect a reply from Tory cloud cuckoo land?"

Better yet, can we expect an intelligent policy on this matter (or anymatter) from the Labour government? AKA Labour Cloud Cuckoo Land?

Jason

It's simple really. We leave the bloody EU and keep our money. When or rather if they are ever able to get their accoutns signed off then we might want to think about joining the EU.

Liz Brown

Bugger Brussels......a perfect time to bring us out and we would save billions as a result

Mark Williams

This isn't a 6 month holiday on VAT payments to small companies, merely a 6 month delay in the timing on the net VAT that they have to pay over to HMRC. This is just tinkering. It won't save any companies, and it won't break any EU laws.

CS

***Think you give them too much credit. Willing to bet that they didn't even consider EU legislation when divising this policy.***

Alex R, that was an unnecessarily devisive post.

Minnie Ovens

which power has been heedlessly and recklessly surrendered to people who are not in the least bit accountable to the British electorate. The Huntsman

The problem being whether this is more true of Brussels or Westminster!
What have we come to?

EDLP

Merely deferring payment will probably help cashflow ... and the manner in which VAT is collected is in reality down to member states.

My concern about the proposal would be down to the potential difficulties if the company uses VAT collected on its sales to continue to trade when otherwise it would go bust!

feeling the pinch

Having paid VAT (being self employed) in recent times, I understood there was a small amount of leeway as to which quarter various transactions can be reported/declared/claimed (and therefore paid to government.)
Surely it only takes a certain amount of discretion on the part of HMRC VAT staff on the timing of parts of the content of one's return, which could aid some of the overall cash flow in the wider economy.
I can't see how this need involve the EU if there's a certain amount of discretion involved.

Tiberius

I haven't read (and am not going to read) the Sixth Directive because the first five bored me to death.

But if it talks about Rates, then Cameron's plan, being about cash flow only, may not infringe its rules anyway. Maybe this is a preliminary "we won't let it rest there" moment?

Most businesses pay their VAT quarterly, so I would be sceptical of allowing six months to pay up. Certainly allowing a quarter's VAT to be paid over three months would be a great help to all businesses, but any longer is asking for trouble in a mini-Brown-debt sense.

But there is no doubt deferred VAT payments are a very efficient way of government helping smaller businesses with cash flow. I just hope it's in place by December!

BrianSJ

Simon Cawkwell is right.
Seasurfer1 is also right - stopping the 2% i.e. 10% tax increase would be a sensible thing to do.
Very worrying indeed if this is the best DC can come up with.

A Horne

Fraser - I don't know about the VAT, but you are wrong about the expulsion tribunals (ETs). However, while you are wrong, the result of the proposal may be worse than you expect.

Article 6 applies to both civil and criminal trials in different ways. It provides, inter alia, that:

"In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law."

If the decision to expell a pupil is considered to be the determination of a civil right (which it probably would) then at present, the pupil's appeal goes to the aforementioned ETs.

If you abolish the ETs, then it is more likely than not, the cases would wind up at the High Court (either as a judicial review, human rights claim or similar). If the same number of people brought claims then it might be more expensive than using the current administrative tribunal system, although that would depend on other matters like funding etc.

The High Court would not be happy to get these cases though...

Fraser Nelson

I fully agree with the sentiment: that Cameron should say "this is an economic emergency, and if the EU doesnt like it see you in court in 2015 and even then we wont pay the fine."

But (Tiberius, EDLP and others) the EU Directive does go into painful detail not just about raates but VAT should collected and at what intervals. Remember, VAT is not a British law - it was invented by the EU. They are paranoid about harmonisation, just read the directive I link to if you can bear to. My reading is that Cameron could change the law to have it collected every six months, but that would have to apply to all countries. But better he makes a UDI - as a warning shot of more to come. Here's hoping...

Michael Julien

I have pointed out several times to my M.P. and to Open Europe that the French have a VAT rate of 5.5% for all repairs to homes over 2 years old. That enables people to improve their homes by more loft insulation or double glazing or even just fixing the plumbing. Are not the French in breach of EU rules? If so, they would not care if they were. They even make two collections of rubbish each week in our region...!!

Cornelius

Here's hoping it will be quietly dropped. If it's illegal find an alternative to help small businesses. There are plenty of alternatives to VAT

Watervole

Let's camcel VAT altogether and two fingers to Brussels!

Mike Wood

Labour didn't worry that their promise to scrap VAT on household fuel was illegal under the VAT Directive in force at that time.

Sure enought, following the election, the European Commission announced that it would not be taking any action against the newly elected Government.

It would seem reasonable to calculate that there is a good chance that the same would happen and if it didn't, an early public fight with the EU on an important but not central issue would not do a new Conservative government any harm at all.

hadrian

As VAT is nothing less than state theft it should be abolished- plain and simple.
As for what our quasi EU bureaucratic dicatators imagine they can procsribe in our supposedly free isle, tell them what the American Independents told the old Brits- 'No representation, no tax.' and thus to go take a running jump. Come on, Cameron, show some backbone!

Piowbecontrold

Why are we even considering what unelected, unaccountable, untrustworthy foreigners think about our Government's actions or intentions toward our tax systems. Let us get the hell out of this EU monstrosity and keep our money. Has anyone ever met an Englishman who supports the EU, with the exception of those who are on the 'Gravy Train'? I haven't.