Government VAT Errors
By Gabelle LLP
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