Businesses 'must act fast for VAT claims'

Small businesses in Yorkshire with outstanding claims for value added tax (VAT) have been urged to act quickly or risk losing out.

A large number of firms are thought to have overpaid VAT between 1973 and 1996, but HM Revenue & Customs is considering the establishment of a time limit for claims due to the administrative burden of processing them all, South Yorkshire newspaper the Star reports.

Billy Cairns, director of VAT services in Yorkshire for business advice firm PKF, said that unclaimed VAT cases could end up costing the Treasury as much as £1 billion when interest is taken into account.

He commented: "VAT was introduced in 1973, so there are potential claims going back that far to be made.

"The only issue is whether calculations will be made on a compound basis, as that will significantly increase the sums payable."

A coalition of business groups headed by the Federation of Master Builders is currently putting pressure on the government to reduce VAT rates for building repair and maintenance work.