BBA: Stop a billion unnecessary tax invoices heading our way

EU proposals under discussion could result in bank customers receiving over a billion useless VAT invoices alongside their statements unless the Chancellor uses his coming Budget to commit to reversing red tape, the British Bankers' Association said today.

An EU proposal to reform Value-Added Tax invoicing would require firms to raise a VAT invoice even for services exempt from the tax. For bank customers this means they will receive more paperwork with their monthly credit card, mortgage and loan statements in the form of an invoice when no VAT is due. Banks estimate the cost in financial terms (environmental impact not included) could exceed £100 million.

BBA chief executive Angela Knight said: "For every £1 financial firms pay in corporation tax, they pay another £1.50 in other taxes and collect a further £2.25 for the Exchequer. They are absolutely integral to making tax policy work and take that responsibility very seriously.

"We know this year's Budget will be the most heavily scrutinised in living memory. The banks are committed to engaging fully with the Government to ensure that together we can reverse the downturn as swiftly as possible and restore the UK to its position among the world's leading economies."

The BBA Budget submission calls for:

a redoubling of effort to avoid bureaucratic European proposals that add nothing to tax revenue;

a commitment to consultation on the draft code of practice on taxation of banks, to ensure that it compliments statute and case law;

meaningful consultation from the Government on policy changes - not merely discussions around decisions that have already been made.