HC Deb 16 March 1998 vol 308 cc946-8
40. Mr. Burns

What representations the Church Commissioners have made to the Chancellor of the Exchequer about the level of VAT on repairs to churches and church buildings. [32937]

Mr. Stuart Bell

The Church Commissioners have contributed to submissions to the Government's charity taxation review made by the Churches Main Committee, which represents 36 denominations and the Jewish faith. Among our major concerns are the facts that the Church of England will eventually lose £17 million a year as a result of advance corporation tax changes; that Church schools are disadvantaged in relation to local education authority schools because, unlike them, they are liable for VAT on any repairs; and that the Church of England pays more in VAT than it receives in grants from English Heritage.

Mr. Burns

I am grateful for that reply. Does the hon. Gentleman accept that there is general bafflement among members of the clergy and churchgoers in West Chelmsford about the fact that, if a new church were to be built there, it would have zero-rating for VAT, while buildings that are important as part of our national heritage, such as Chelmsford cathedral, incur 17.5 per cent. VAT on any repairs? Will he continue to press the Chancellor vigorously, to try to end this nonsense, which penalises our national heritage in favour of new buildings?

Mr. Bell

I am grateful to the hon. Gentleman, and I am aware that the Chelmsford diocese has taken a strong interest in the matter. The General Synod voted recently to support a call for a reduction to 5 per cent. VAT on repairs. The Church Commissioners have contributed to the debate and sent a booklet, and I have written personally to my right hon. Friend the Chancellor of the Exchequer. I know that others in the Church will make their own representations. Everything that can be done is being done. This is not special pleading on behalf of the Church, but a response to the request for submissions to the Government's review of charity taxation.

Mr. Pike

Is it not a fact that many church congregations could move to modern buildings, which would be appropriate for their worship and much cheaper to run? However, as they are in historic buildings that are an important part of our heritage and which we have to preserve, there should be a special response to ensure that the buildings, which are of national and local importance, can be retained.

Mr. Bell

Yes, and I am grateful to my hon. Friend for that question. The buildings are of national importance and part of our national heritage. Within the Church, it is thought rather odd that alterations to listed church buildings are zero-rated for value added tax and yet repairs are rated at 17.5 per cent. That is an anomaly which we hope—it may be a pious hope at this stage—will be rectified tomorrow in the Budget.

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