Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

HMRC caught 'cooking' the VAT stats

by
31st Jul 2008
Save content
Have you found this content useful? Use the button above to save it to your profile.

A report in Taxation magazine accuses HMRC of providing 'seriously misleading' statistics on VAT registration delays.

Newly published minutes from the 9 July meeting of the Joint VAT Consultative Committee (JVCC) show that, prior to 1 April 2008, the revenue capped the reported length of the wait for each registration at 60 days when calculating the average.

HMRC's Kate Jarvis is documented in the minutes to have given these details by way of explanation for why the average time to process a low-risk application is shown to have risen in recent months.

Shadow Treasury minister David Gauke has submitted a number of written questions to Parliament on the subject of VAT registration delays.

He said it was clear from the JVCC minutes that 'statistics previously provided... were seriously misleading and likely to be a substantial underestimate.'

As an example, Mr Gauke cited an incident in October last year, when financial secretary to the Treasury Jane Kennedy told Parliament the average processing times in days of each VAT registration site:

  • Wolverhampton – 32
  • Grimsby – 38
  • Newry – 52
  • Carmarthen – 43

David Gauke said: 'It was not made clear that, in reaching this calculation, the Treasury was putting a cap on the length of processing time of 60 days, which would have distorted this number'.

The Conservative MP then revealed that he will write to Jane Kennedy 'to ask for an explanation as to whether she was aware that a 60-day cap was in place when calculating these numbers and why this was not made clear in the answers to Parliamentary Questions.'

Figures and schedules provided by HMRC for JVCC on several occasions have contradicted data on VAT registration given by the taxman to Parliament.

'It's disappointing that HMRC acted to conceal the true picture for so long,' said JVCC member John Arnold, who is also chairman of the ICAEW's VAT committee. If they needed to underestimate figures systematically, they should have disclosed that they were doing so'.

Taxation editor Mike Truman was critical of non-HMRC members of the JVCC who attended the 9 July meeting but did not make this issue public well before now, he says, 'It seems incredible, when so much attention was being paid to these figures, that HMRC never explained the 60-day cap. The figures for July 2007, for example, show an average of 42 days taken to process complete, accurate, low-risk applications. If no figure over 60 made it into that calculation, the real average must have been much higher. There are copious footnotes to the later statistics, but still the cap is not mentioned.'

HMRC have denied any wrongdoing, and claims it had "been consistently clear about the basis on which statistics on VAT registration are calculated, including that there have been limitations in the past".

"In recent months we have made substantial improvements to the processing of registration applications, and this has enhanced the quality of the data and statistics available on VAT registrations," added an HMRC spokesperson.

Useful links:
JVCC minutes

Tags:

Replies (2)

Please login or register to join the discussion.

avatar
By mikewhit
04th Aug 2008 13:51

Damned lies
When we all know that, for example, the average (presumably - arithmetic mean) does not really provide the best metric for this ... mode & median, anyone?

Or they could at least have given us the standard deviation to show whether the "average" quoted was actually typical, or just halfway between mainly very quick and very slow turnarounds !

PS - no dammit, on second thoughts - we need the graph !!

Thanks (0)
avatar
By AnonymousUser
01st Aug 2008 10:34

Maybe 50 days
I subsequently did some speculative calculations which I reported on our blog:
http://taxation-magazine.blogspot.com/2008/07/algebra.html

My best estimate is that the real figure for August was probably more like 50 days than the 42 they reported.

Mike Truman
Editor, Taxation magazine

Thanks (0)