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Written question asked by Lord Pickles (Conservative) on Monday, 15 October 2007, in the House of Commons. It was due for an answer on Wednesday, 17 October 2007. It was answered by Jane Kennedy (Labour) on Tuesday, 23 October 2007 on behalf of the Treasury.

VAT: Registration

Question
To ask the Chancellor of the Exchequer what the reasons are for the time taken to provide new businesses with a VAT registration number; what the performance against the eight week target period (a) has been in the last period for which figures are available and (b) is expected to be over the next 12 months; and if he will make a statement.
Answer

HM Revenue and Customs (HMRC) receive over 285,000 VAT registration applications each year and have a target of clearing complete and low risk applications within 14 days following receipt. The Government recognise that, over recent months, HMRC have fallen short of this target.Several factors have contributed to the increased processing times. VAT registration is the entry point to serious frauds such as Missing Trader Intra-Community (MTIC) fraud, which reduced VAT receipts by an estimated £2 billion to £3 billion in 2005-06 and represents a very serious and sustained attack by organised criminal networks on the UK's VAT system. HMRC has taken steps to prevent such abuse of the VAT system, including a range of pre-registration checks, which last year weeded out over 7,000 fraudulent applications.Earlier this year HMRC also saw a peak in the number of VAT registration applications as some businesses tried to circumvent certain anti-avoidance measures introduced in Budget 2007. As a consequence the operational pressures on HMRC have intensified and work continues to manage the response to this pressure.HMRC have a 14-day target for clearing complete and low risk applications rather than an eight-week target period. For 2007-08 the performance against that target is as follows:

Month (2007) Number within 14 days Proportion (percentage) within 14 days
April 1,493 7
May 1,883 7.5
June 3,174 17
July 3,884 13
August 3,997 14.4
September 5,686 19.75

HMRC has put in place a number of specific measures designed to improve registration processing times. It has made immediate improvements to speed up the initial vetting of applications, and is targeting its risk checks more closely on the highest risk applications, so as to minimise disruption to legitimate applications. Additional processing staff have been recruited, more of the existing staff are now dealing with VAT registration work and IT challenges have been addressed with improvements planned over coming months.HMRC anticipate that these steps will provide significant additional processing capacity. However the lead-time for some changes, including training of new staff, means that significant improvement is not expected until later in the year. HMRC recognises that performance needs to continue to improve and will continue to work hard to reduce VAT registration delay.

Secondary information

Type
Written question
Reference
158996; 465 c256-7W
Session
2006-07
Subjects
Registration VAT
Link
View this Written question on www.publications.parliament.uk