The Office for National Statistics (ONS) has published its first set of VAT turnover data, the initial step in process to reform the way in which it estimates economic growth
Once fully developed, the new VAT data will be an important new data source for GDP, with the ONS saying this will deliver greatly improved detail about the UK economy, with more detailed industry level data, better geographic breakdowns and more information about small businesses.
In addition, this new data source will give ONS an almost complete picture of the turnover of UK businesses within five months of the end of each quarter, as well as potentially reducing the frequency of GDP revisions.
Nick Vaughan, ONS director of national accounts, said: ‘Using tax data to help produce key economic statistics is just part of ONS’s ambitious plans to rely less on paper-based surveys and make more use of hard data gathered elsewhere in government.
‘This new VAT data will provide a much clearer picture of how UK companies are performing, helping policy makers to respond to the changing needs of the economy.’
Last year the ONS announced plans to partially replace monthly business surveys, which are currently used to estimate economic growth, with data in VAT returns from HMRC, aiming to complete the transition by 2020.
Currently ONS sends out 45,000 monthly surveys to UK companies that cover around 55% of the economy. The VAT turnover data are a census of all businesses registered for VAT, which equates to around 1.75m businesses per month. Once VAT turnover data are introduced, coverage of these units based on turnover will be 49% within three months, and approximately 100% within six months of the VAT period end.
It is anticipated that once VAT data are introduced, the number of surveys sent monthly could be reduced by up to half, while paper-based business surveys will disappear by 2019.
At the time, the ONS said the move to electronic data collection and the use of HMRC data, including VAT returns, could potentially deliver significant net savings for the monthly business survey, which are estimated to be of the order of 40% in running costs (currently £1.8m), and some 50% in the compliance cost to business. The most significant savings would be for small and medium size businesses currently required to complete the surveys.
