Pat Carey (Dublin North West, Fianna Fail)

The VAT registration thresholds for small businesses were increased in the 2008 budget to €37,500 in respect of services and to €75,000 for goods with effect from 1 May 2008. Ireland operates some of the highest registration thresholds in the EU. Some member states do not operate any VAT registration threshold requiring all business to register. Registration thresholds reduce the administrative burden on small business, often at development stage, and on the Revenue Commissioners.

VAT returns are normally made on a two monthly basis in arrears. Traders making VAT returns on-line may do so until the 23rd of the month, instead of the 19th of the month. There are significant cost savings and efficiency gains for business that use revenue on-line services. It is quick and easy to use and facilitates cashflow management.

For businesses with a yearly VAT liability of €3,000 or less, the option of filing returns on a half-yearly basis is available. For businesses with a yearly liability between €3,001 and €14,400, the option of filing returns every four months is available. Over 76,000 traders were eligible for this initiative. This reduces compliance costs for firms with small VAT liabilities.

The 2007 budget also introduced the annual VAT cash accounting threshold for small firms from €635,000 to €1 million, with effect from 1 March 2007. Traders who qualify for this method of accounting for VAT are not liable to pay the VAT until they receive payment for the goods and services which they supply. Approximately 65,000 traders account for VAT on the cash basis.

Deferring VAT payments for a reasonable number of firms would have a significant once-off cashflow cost, approximately €1.7 billion, for the Exchequer in the year of its introduction. I cannot accept the recommendation.