No: CE 11                                            28 November 1995


			   BUDGET 1995 : VAT

		TIGHTER REQUIREMENTS FOR CREDIT NOTES


The Chancellor announced the introduction of formal requirements for 
businesses to issue a credit or debit note when a change in price 
alters the amount of VAT due on an invoice after it has been issued.  
Consultation with business began in October 1995.

The measure, which is expected to come into effect during the summer 
of 1996, will protect the tax revenue by making it harder for a 
purchaser to reclaim more VAT than the supplier has actually 
accounted for.


NOTES FOR EDITORS

1.     Current VAT regulations fall short of providing the necessary 
certainty over how VAT may be adjusted following an increase or 
decrease in the previously invoiced price. The absence of a provision 
defining the information which should be notified to the customer can 
result in a failure to recognise when the VAT due should be adjusted.

2.     A great many businesses already issue credit/debit notes which 
reflect such adjustments. In order to ensure that business 
considerations and practices are fully taken into account in the 
drafting of new regulations, Customs are consulting on the proposals 
for change. Copies of the consultation paper can be obtained from :

		David Glencross
		HM Customs and Excise
		VAT Collection Division (VAT6D)
		Queens Dock
		Liverpool L74 4AA

		Tel   0151 703 8612
		Fax   0151 703 9614

3.     The revenue yield from this measure is estimated at 5 million 
Pounds a year from 1996/97.

4.     A Compliance Cost Assessment (reference CCA 4/95) is 
available, copies of which can be obtained from David Lonsdale, CDG, 
8th floor C, HM Customs and Excise, New King's Beam House, 22 Upper 
Ground, London SE1 9PJ (Tel No: 0171-865-5570). The CCA will, 
however, be subject to revision in the light of consultation and 
the finalised requirements of the new regulation.

5.     Details for traders are available in Budget notice BN 41/95.




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