Recruitment agency calls for VAT fine for late payers
Employment specialists 2B Interface have suggested that large companies who are late in paying SMEs should be penalised with a 20% VAT fine.
According to managing director of 2B, Beatrice Bartlay, late payment is destroying small businesses and to combat this proposes that the VAT fine be imposed where invoices for goods and services remain unpaid for more than 60 days. The additional VAT would not be recoverable therefore dissuading the debtor from delaying payment beyond the two months.
Bartlay points out that employers would not dream of treating their staff in the same way as SMEs when it comes to paying them.
Back in March of this year the Department for Business, Innovations and Skills announced amendments to the late payment legislation which forces debtors to pay interest and reimburse recovery costs of the creditor if they do not pay for goods on time – 60 days for businesses and 30 days for public authorities. Bartlay believes this is not sufficient to deter larger companies from “flexing their muscles” and that 30 days should be standard industry practice.
The Forum of Private Business, however, does not agree with 2B's proposal as punishing large companies in this way would be as detrimental as late payment is to small businesses.
Kevin Hall, VAT consultant at tax advisory firm Gabelle, points out that a VAT fine is not compatible with European VAT law therefore preventing the UK from introducing such a law. Before a fine of the type suggested by 2B could be implemented then EU law would have to change first.
Perhaps if director of companies were held resposible in law for company dets even if the company goes bankrupt.