HM Customs and Excise 3
                                                 17 March 1998
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HELP FOR BAD DEBTS ON BARTER DEALS 

In response to a European Court of Justice ruling, the
Chancellor announced today  that businesses will now be able
to claim VAT on bad debts arising from barter deals  as well
as from payments due in money. This relief is already
available on an  administrative basis until the law comes into
effect later this year. 

DETAILS

1.     Current UK law allows businesses to claim back VAT they
have paid to  Customs and Excise if they have not been paid by
their customer. This applied only  where payment for the goods
or services was due to have been made in money. The  relief
was not allowed where payment was due in kind under barter
arrangements. 
2.     The European Court of Justice decided last year in the
Goldsmiths Jewellers  case that the UK could not restrict bad
debt relief to payments due in money.  UK law  is now being
amended to address this.


NOTES FOR EDITORS

1.     The changes in the law will come into effect at Royal
Assent, but Customs have  already implemented the European
Court decision by allowing bad debt relief in  cases of barter
on an administrative basis. The measure will therefore not
have any  revenue effect.

2.     Details for traders are available in Budget Notice BN
10/98, which is available  from Customs and Excise Business
Advice Centres and from the Customs and  Excise Internet site.



Press enquiries only to HM Customs and Excise, Public
Relations Office, New  King's Beam House, 22 Upper Ground,
London, SE1 9PJ.  
Telephone:  0171 865 5468/5471


Others should contact their local VAT Business Advice Centre,
listed under  Customs and Excise in the telephone book.

Customs and Excise Internet address: 
http://www.open.gov.uk/customs/c&ehome.htm

This news release can also be found at :
http://www.hm-treasury.gov.uk. Other Treasury material can
also be found at  this address.