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Advice to small firms that they could claim back VAT overpayments dating back to 1973 has got through, but with potentially devastating consequences for the country’s already beleaguered public finances. Following a House of Lords ruling last year, companies were told they had a small window to recover VAT owed between 1973 and 1997 before the claims would be restricted to three years. In the light of their guidance, advisors said companies were instructing them to recover significant sums from the VAT man, but the true extent of the claims is yet to be disclosed by official bean counters. However, experts at Deloitte told the Sunday Telegraph that they calculate the total amount at stake following the VAT ruling to be £7.25billion – seven times more than was estimated just a few months ago. The paper reported that the undisclosed, official scale of the black hole has sparked accusations from the Liberal Democrat Treasury team that Alistair Darling, the chancellor, is presiding over a ‘cover up culture.’ Although unofficial, the estimate of a £7bn VAT leak in the public finances will add pressure to a government reportedly divided on how far to push the message of “Labour investment” against “Tory cuts.” The strategy had appeared to pay off until Mervyn King, the governor of the Bank of England, effectively said last week that there would be tax rises and spending cuts after the next general election no matter who was in power. Jun 29, 2009 Email this article Printer friendly page Previous Page
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