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Government VAT Errors

By Gabelle LLP

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Public sector receipts are forecast by the government and the Office for Budget Responsibility.

The government has systematically made an error in determining the VAT receipts, providing a welcome boost to the economy.

VAT deductions are less due to the public spending cuts implemented in recent years.  As a result, VAT deductions were overestimated and net VAT receipts were underestimated.  This error has built up as the fiscal consolidation has continued.

The resulting correction has boosted VAT receipts by around £0.4 billion in 2015-16, and will rise to £3.3 billion in 2020-21.

Published December 2015