Thursday, August 05, 2010

That is one enormous Salami

The way that teh EU takes power, regulates and generally does stuff is often described as 'salami slicing' or the boil a frog method. Essentially incrementally power drips and cost increases.

Here is an example. Last week I was looking at a judgement at the ECJ. It was about vouchers and VAT or more specifically Retail vouchers provided by an undertaking to its employees as part of their remuneration. I tried to get a few papers interested but frankly my expertiese was not enough to make it comprehensible.

Now the specialist press have got hold of it, and now I start to realise what one small judgement means in reality,
A ruling by the European Court of Justice (ECJ) on VAT on salary sacrifice schemes could see HMRC assessing employers for output tax over the last four years, tax advisers have warned....
With the ECJ telling HMRC to collect VAT on some schemes, businesses could lose up to ‘half a billion pounds over the past four years in unpaid VAT, and over £100m per year going forward,’ according to law firm DLA Piper.

An extra £100 million a year in costs on business! Just like that.

UpdateThis case will however please some beer purists.

It seems that the Telegraph finally noticed.
British businesses offering staff vouchers as part of a salary sacrifice scheme will no longer be entitled to recoup VAT costs after a European court ruling, costing them up to £150m a year, accountants have warned.


Jon Worth said...

Ah, well, will help reduce the deficit. Might save a few public sector jobs...

Gawain Towler said...

As Babs Windsor says
"Every little helps..."