No: C&E 7                              29 November 1994


                          BUDGET 1994 : VAT

CONSULTATION ON CHANGES IN PROCEDURES FOR ACCOUNTING FOR VAT


The Chancellor has announced that Customs and Excise will
consult businesses about a proposal to introduce annual VAT returns
and     payments for traders with a turnover of less than Pounds
100,000. Currently most businesses are on a quarterly cycle.

The intention is to seek business views on proposals which
would    reduce the administrative burdens of VAT for small
businesses, and increase the cash flow benefits of VAT already available to
them, as well as reduce the costs of administering VAT for Customs
and Excise.

The proposal would not apply to business which normally
claim VAT repayments or those with a history of late or inaccurate VAT
payments.

Subject to views expressed in the consultation exercise, it
is envisaged that this change would be phased in.  It would
apply initially to all such traders whose turnover is below the
registration threshold, starting with return periods
commencing on or after 1 December 1995.  It would be extended to traders up
to Pounds 100,000 annual turnover a year later.  As this group
are obliged to register for VAT, they would be able to elect to opt out of
annual returns and payments.

Customs will consult widely on these changes and how they
could be implemented.

The consultation will also cover possible changes to methods
of payment and repayment of VAT to use more modern and secure
means of payments.  It is also intended to explore the options for a
simplified method of calculating VAT due for small traders.



NOTES FOR EDITORS

1.     Regulations made under the VAT Act 1994 allow Customs
to determine the length of a trader's tax periods.

2.     Introduction of annual returns and payments would
reduce the obligations of the traders affected to one routine return
document   and payment in any twelve month period, rather than the four
currently.  Decisions will take account of the views of
business and will be announced in good time.  Traders affected will be
notified by  Customs in time to allow amendments to systems for the
transition of any new procedures.

3.     Over 600,000 VAT registered net-payment traders have
a turnover of Pounds 100,000 or less.  Of these, about half
have a turnover below the registration threshold.

4.     A consultation document covering these proposals will
be issued shortly.





ISSUED BY:       HM CUSTOMS AND EXCISE,
                 PRESS AND INFORMATION OFFICE,
                 NEW KING'S BEAM HOUSE,
                 22 UPPER GROUND,
                 LONDON, SE1 9PJ

TELEPHONE:       0171 865 5468/5470/5471

FAX:             0171 865 5625