Benefits of releasing an Open VAT Register

Description & Request Overview

HMRC hold the dataset known as the VAT Register which contains information on businesses such as; VAT number, Business status (i.e. Sole proprietor, partnership, corporate, etc), Name and business address, Contact information – telephone, email, website, Business activities, Other business associations in the past 2 years, New registration or ceasing registration, Turnover, Date of Establishment, Applicants Name & Address.

Releasing some or all of this data will enable banks to make better lending decisions to increase the availability of trade credit.

Data Release Rationale

BIPA (Business Information Providers Association) have estimated that the VAT register could benefit UK PLC to the tune of around £50 billion. This is based upon an increase in credit requests and associated credit approvals powered by the positive data from the VAT Register.

The VAT Register will be positioned as an additional source of information to those provided by Companies House and member of BIPA. It will also be used by organisations such as the members of BIPA to add value to existing data products and services, further increasing the positive economic benefits for their customers.

This enhanced data could be returned to HMRC to improve the efficiency of tax collections to provide greater revenue and / or cost savings. 

Businesses (including SMEs and lenders) will be able to comply more easily with anti-money laundering (AML) requirements. This creates positive business efficiencies and cost savings.

Commercial fraud may be reduced through the enhanced identification services enabled by the VAT Register. This has obvious economic & social benefits. In 2011, CIFAS members reported 250,000 instances of commercial fraud (a 9% year on year increase).

While the data should be released openly, some elements could be offered as an enhanced, paid for product by HMRC (similar to the Companies House model).

There are European Countries that already have a full business register including both incorporated and unincorporated businesses e.g. France and some that in addition use the VAT number as the basis of business identification e.g. Belgium.

Benefit description

BIPA (Business Information Providers Association) have estimated that the VAT register could benefit UK PLC to the tune of around £50 billion through improved access to funding for small businesses.

This is based upon an increase in credit requests and associated credit approvals powered by the positive data from the VAT Register.

The VAT Register will be positioned as an additional source of information to those provided by Companies House and members of BIPA.

It will also be used by organisations such as the members of BIPA to add value to existing data products and services, further increasing the positive economic benefits for their customers.

This enhanced data could be returned to HMRC to improve the efficiency of tax collections to provide greater revenue and / or cost savings.

Businesses (including SMEs and lenders) will be able to comply more easily with anti-money laundering (AML) requirements. This creates positive business efficiencies and cost savings.

Please identify where further case studies or quantifiable evidence to support the release of this dataset?

Benefits analysis

Release of the VAT register as Open Data will:

Enable the release of business credit leading to growth of the UK Economy by up to £50 billion (BIPA estimate).

Improve access to business funding for 750,000 businesses.

Reduce the instances of commercial fraud (250,000 cases in 2011).

Enable the creation of new services such as ‘trusted business’ apps with the VAT Register acting as the unique data identifier.

Create internal government efficiencies through better data sharing and tax gathering.

Can you identify further areas where this dataset release will create opportunities for innovation and new business?

Can you help identify sectors, businesses and organisations that will benefit from the release of these data?

Barriers and Requirements for Release

It is assumed that the VAT Register data contains no information of a personal or sensitive nature.

Any sensitive data would need to be removed before release based upon advice from the ICO.

HMRC would need to make the data available on a regular basis (weekly or more regular is recommended).

HMRC would need to make the data available as a download or API.

While one of the main aims of the request is to reduce commercial fraud, risks posed by the data (in terms of enabling fraud) will need to be examined by Government with partners such as BIPA.

An ‘Opt Out’ scheme for Unincorporated business owners (similar to Edited Electoral Roll system) could prevent any negative perception of the data.

Consideration should be given to how the data will be used (e.g. marketing, credit or other).

Can you identify other barriers to this data release, or solution to those listed?

Recommendation 

The business case for releasing the VAT Register is clear. Today, small business credit scores are approximately 40% lower than is expected due to a lack of positive data available to credit reference agencies (and in turn, lenders). This makes access to trade credit lower than it should feasibly be.

By providing the VAT number and additional details; business information providers will be able to create linked, up to date data assets to improve the chances of successful, well managed small businesses having access to the kinds of funding required to help them grow.

Without access to the VAT Register, business lending will remain sluggish and the chances of success for many small enterprises will be endangered.

The Open Data User Group therefore call on HMRC to release the VAT Register as an Open Database under the Open Government License.

Sector: 

Comments

Experian Support the Release of the VAT Register by HMRC

Experian supports and recommends the release of the VAT Register, as it will allow CRAs to be able to identify and verify SME businesses more easily, and will allow for improved accuracy of credit scores.  In turn this will allow Banks/Lenders better visibility of the risk associated with these businesses. This will have a knock on effect to the economy and support the Government in its aims to stimulate economic growth, whilst aiding the banks to hit their lending targets. Also, with the improved accuracy of credit scoring, there will be an improvement in trade credit between businesses, as there would be an increase in credit offered to SME businesses that fall within the VAT Register, that without the release of this data, would otherwise have had a lower credit score and therefore may restrict the level of credit available to them. Also, through the improved access to verification and identification data for these businesses, it will help support AML/Anti-fraud activity, in being able to get clear transparency as to whether a business exists or not. Experian through our representation within BIPA is keen to work closely with HMRC along with ODUG, the Data Strategy Board and the wider lending community to help make the release of the VAT Register possible for these purposes, within the current legislative framework.

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A view from Wonga

Data is a key ingredient to any algorithm-based approach to assessing risk. The more business data that is available, the better the basis for business risk decision-making.

An Open VAT register, such as the one proposed by gov.uk, would significantly increase the volume AND the quality of data available to credit reference agencies and platforms like Wonga for Business. It would lead to an increase in positive lending decisions, allowing more businesses to grow. We support the Open Data User Group's call, and look forward to working with all parties who wish to see it implemented.

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VAT Register data disclosure is supported by Graydon UK

Graydon UK wishes to voice its support for requests to release data from the VAT register.

Increased levels of verification granted from VAT data will allow UK Credit Reference Agencies to give even more timely and up to date information to their clients with an improved level of customer confidence. With no UK central register of unincorporated businesses, organisations can spend large amounts of time and money in verifying that a prospective client is, in fact, who they say they are. Access to identification data on the VAT register will add an official source of current data which will reduce this workload for decision makers. This will be true of products supporting unsecured lending (Trade Credit), Commercial insurers, Anti money laundering/Know-Your-Customer products and services and secured lenders such as banks.

In times of recession where the appetite for lending is at its lowest ebb, any activity to increase the confidence of lending and maintain low levels of risk is essential to recovery plans, and the additional confidence that government verification can bring could make all the difference to a start-up business or a struggling SME. The impact will be felt worldwide as our ability, as suppliers to the international markets, to champion UK SMEs better in their search for international partners will also benefit from the addition of this data.

Graydon UK, through our representation within BIPA, is pleased to be included in discussions in relation to the potential release of data from the VAT register. We believe that even the smallest steps toward a data sharing solution involving VAT data will benefit all lenders, SMEs immediately and, by extension, the whole economy.

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Forum of Private Business supports data release with safegua

Increased availability of information on unincorporated businesses can be used to support lending to those businesses. By making the information accessible it will ensure that Credit Reference Agencies are able to better categorise the business and improve the opportunities for that business to receive funds, if desired.

The Forum of Private Business understands there is currently no central register of unicorporated businesses at present. The release of this data will require some safeguards to be in place and HMRC must be vigilant to ensure that only accurate information is released, albeit on a regular basis. HMRC should also ensure a monitoring relationship is in place to ensure the proper use of this information by Credit Reference Agencies, though this role could be given to the Trade Association.

Government must ensure opportunities for fraud are identified before data is released and prevented to the greatest ability. In addition, an opt-out option for businesses from this data release should be made clear.

Lending in the economy to small businesses remains slow. Opening up this information can help to tackle some of the credit shortage that exists, though it should be in parallel with continued efforts to improve bank lending together with incentivising alternative forms of finance.    

The FPB supports the opening up of this data.

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Growth Intelligence Supports

The UK already has some of the best digitised private company information in the world. We use machine analysis of this data to provide intelligence on companies abroad too. This new data would confirm the UK as a global leader in the business intelligence space and enable new and innovative British companies to export intelligence.

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