Church Bells: VAT Liability (Hansard, 19 October 1995)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, certain work to church bells has been standard rated since 1973. The VAT liability depends on the facts and circumstances of the particular work.

§ Lord Boyd-Carpenter
My Lords, as this tax has not been levied on church bells for years, can my noble friend explain why quite recently it has been decided to impose it? Does my noble friend agree that the revenue obtained is absolutely trivial and that the difficulty and 822 embarrassment, particularly for those who have to pay for the maintenance of small churches, is very serious indeed and giving rise to very deep feelings?

§ Lord Mackay of Ardbrecknish
My Lords, the rules as regards listed buildings were clarified in a change to the law effective from 1st March this year contained in a statutory instrument. Some months after that Customs HQ discovered that there was a rather over-liberal interpretation being placed on the rules concerning one particular bell foundry. Recently, Customs have met representatives of the Church and of the church bell industry. We are discussing with them and other groups concerned the whole problem of listed buildings. We are working towards a set of principles to be followed when deciding the VAT liability for work on listed buildings, which obviously includes bells in listed churches.

Lord Bruce of Donington
My Lords, can the noble Lord inform the House whether our fellow member states in Europe are liable for the same tax on their bells under the sixth VAT directive? If that is the case, does he envisage certain difficulties arising in the city of Rome? Before this matter is finalised, will the noble Lord give the House an assurance that he will take into account the views of one of the country's leading campanologists, namely, the noble and learned Lord, Lord Hailsham of Saint Marylebone, who is well skilled in the ringing of bells?

§ Lord Hailsham of Saint Marylebone
But not in church!

§ Lord Mackay of Ardbrecknish
My Lords, I say to the noble Lord, Lord Bruce of Donington, that I realised that there would be some peals of laughter during the course of this exchange. Introducing my noble and learned friend Lord Hailsham of Saint Marylebone is going even further than I anticipated when trying to assess the direction this Question would take. As regards the serious matter of the sixth directive, everyone is subject to its rules. It fully safeguards our position and that of all member states concerning the existing position of their VAT rates. For example, those items which we have zero-rated will continue to be so rated. The noble Lord asks about Rome. As that city is in Italy, I can say that in that country there is a reduced rate of VAT of 4 per cent. on buildings. That can be continued for exactly the same reason as we can continue with our reduced rates. However, neither we nor any other member state can alter the way in which these reduced rates are dealt with without the agreement of all our colleagues.

§ Baroness Cox
My Lords, I declare my interest as a very humble campanologist. Is my noble friend aware that the ancient art and science of bell ringing is a tradition unique to this country? Is he aware that many people regard it as a precious tradition and that everything should be done to help preserve it? Therefore, can my noble friend accept that the openness of his reply as regards the current situation may be welcomed by the campanologist fraternity? Can he confirm that the current exemptions on new bells and the fitting of new bell frames will remain in place?

§ Lord Mackay of Ardbrecknish
My Lords, I can say that we appreciate the point made by my noble friend. Certainly, in England, the tradition of hell ringing is a long and honourable one. It is one of the joys of the English countryside. It may be something like piped bands. A field or two between one and the source of the sound can actually improve it. It is an important tradition and we accept that. In order to allow for existing commitments and fund raising to continue, the Customs have made a concession to delay the implementation of any changes to VAT liability until January 1996 and to allow two years for orders placed by then to be commenced. Guidance will be widely publicised.

§ The Lord Bishop of Norwich
My Lords, is the Minister aware that church bells cannot ring unless church towers are kept in good repair? Is he further aware that that is made extremely difficult for us because we pay to the Government in VAT on church repairs more than twice the amount of money we receive from the Government through English Heritage? Is the Minister also aware that an enormous number of people of all political persuasions and none—not least in this House—regard the situation as little short of scandalous?

§ Lord Mackay of Ardbrecknish
My Lords, I understand from the debate to which I replied earlier in the year that the right reverend Prelate and others share that feeling. I have to say to him that I do not believe that the Church can be excused its responsibility to pay its share of taxes just as everyone else and every other organisation have to do. In conjunction with English Heritage we have ensured that £104 million goes to that body as government grant-in-aid and that £10 million of it is channelled to historic churches and another £4 million to cathedrals. We believe that that is the correct way to go about the matter. If it is a listed church and what is taking place is defined as "alterations", such costs are not liable to VAT.

§ Lord Eatwell
My Lords, does the Minister agree that to accede to the request of the noble Lord, Lord Boyd-Carpenter, for a tax cut, however worthy, would be inconsistent with the Government's declared goal of cutting government borrowing, especially at a time when it is running at a higher level than last year?

§ Lord Mackay of Ardbrecknish
My Lords, we have certainly got quite a long way away from the original Question about bells. I am surprised that the noble Lord, Lord Eatwell, could not think of a question about bells and had to divert from that subject. This Government are, and always have been, very keen to make sure that we match our spending and taxing. One of the firm objects of the Government is to keep borrowing and spending under control. As regards spending, I hope that we can have the support of the Opposition when we come to some of the things we have to do to control spending. However, in the legislation which I have brought to your Lordships' House this Session I have not noticed that support.

§ Baroness Platt of Writtle
My Lords, my noble friend has just mentioned the discussions which are to take place this year. He also mentioned alterations and 824 repairs. Is my noble friend going to take part in those discussions? Does he agree that it is more important in the case of a church that it should be kept in repair than that there should be alterations? Will that question be raised in the discussions which are to take place?

§ Lord Mackay of Ardbrecknish
My Lords, part of the discussion is related to the difference between alterations and repairs and maintenance. In fact, the statutory instrument to which I referred earlier tries to clarify that along with the recent judgment of the High Court in the case of the Windflower Housing Association, which ruled that an alteration resulting from repair and maintenance works did not qualify for zero rating. Between that judgment and the redefinitions in the statutory instrument, we hope to be able to make clearer the difference between alterations and repairs and maintenance.