Draft Directive amending Council Directive 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of Value Added Tax.
||Article 93 EC; consultation; unanimity
||17 November 2000|
|Forwarded to the Council:
||17 November 2000|
|Deposited in Parliament:
||7 December 2000|
||HM Customs & Excise
|Basis of consideration:
||EM of 29 October and SEM of 14 November 2001
|Previous Committee Report:
||HC 28-iii (2000-01), paragraph 8 (17 January 2001)
|To be discussed in Council:
||No date known|
19.1 The current EC VAT invoicing rules are set
out in Article 22 of the Sixth VAT Directive (77/388). They set
out minimum requirements only and do not reflect recent technological
developments and commercial practices, particularly the issuing
of invoices by electronic means. The diversity across the Community
and restrictions in some Member States may be affecting competitiveness
and slowing the development of electronic commerce generally.
A Commission study in 1999 concluded that Community legislation
should include a harmonised list of statements to be included
on every invoice and should explicitly authorise electronic invoicing.
19.2 Based on the 1999 study, the Commission
now proposes amendments to Article 22 of the Sixth Directive to
update and standardise current VAT rules for paper invoices across
all Member States and to introduce new common rules on electronic
invoicing. The previous Committee considered, but left uncleared,
the document in its Report of 17 January 2001, pending receipt
of the Regulatory Impact Assessment (RIA) and details of the views
expressed by business interests in the UK.
The Government's view
19.3 In her Supplementary Explanatory Memorandum
of 14 November 2001, the Paymaster General (Dawn Primarolo) has
provided the information the previous Committee requested.
19.4 As regards the consultations, the Minister
"Responses were received
from the Confederation of British Industry, the VAT Practitioners
Group, the VAT in Industry Group, the British Bankers Association,
the Business Applications Software Development Association, and
Deloitte & Touche. All generally supported the draft Directive
and the aim of harmonising VAT invoicing rules across the EU.
The VAT Practitioners Group, for example, said 'there are strong
arguments for a greater degree of harmonisation of conditions
governing VAT invoicing'. And the VAT in Industry Group, said
'Overall the members welcome.. ..the proposal to simplify, modernise
and harmonise invoicing conditions" .
"Their main concerns with the Commission's proposals
were as follows:
the obligation to
issue an invoice for exempt supplies;
the requirement to issue an invoice for domestic
the need for invoices to make reference to
the Sixth VAT Directive provision, in order to justify an exemption;
the requirement for invoices to show the place
of supply of goods or services;
the obligation for an electronic invoice to
bear an advanced electronic signature to guarantee its authenticity
the requirement that electronic invoices must
be stored together with their advanced electronic signature;
the inability for both parties to agree to
exclude VAT from credit and debit notes;
difficulty in interpreting 'smaller amounts'
invoices for which [businesses] can omit some of the compulsory
inflexible approach to simplification in areas
other than invoices for 'smaller amounts'.
"Many of these concerns have been resolved in
subsequent Working Group negotiations. Later this month, as the
final shape of this Directive becomes clearer, we will give our
business contacts a further opportunity to comment on its contents."
19.5 As regards the RIA, the Minister says that:
"There is likely to
be a first year net regulatory cost to the trade of about £70m
which will thereafter be offset and, in the long term, exceeded
by year-on-year savings of £25m. Whilst there is a regulatory
cost to the trade in the short term, this is in fact a simplification
which will be generally welcomed by business. Further, the additional
short-term costs of the change are likely to be significantly
outweighed by the benefits in the long term."
19.6 Our predecessors considered the proposal
to be an important administrative development affecting the whole
of the business community. They noted that the Directive would
replace what are at present minimum requirements only with new
and harmonised procedures, and considered it important to ensure
that the harmonised requirements put the least possible extra
bureaucratic requirements on UK businesses, notwithstanding the
compensating advantages that the proposal will generate.
19.7 The Minister has provided the information
requested, and we clear the document.