Horse Passports (Hansard, 4 March 2004)

§ Lord Dixon-Smith
My Lords, at the request of my noble friend Lord Burnham, whose car has broken down, I beg leave to ask the Question standing in his name on the Order Paper:
To ask Her Majesty's Government why VAT is payable on horse passports when it is not payable on passports for people or cattle.

§ Lord Davies of Oldham
My Lords, passports for UK citizens and for cattle are issued under statute by public authorities. On the facts available, Customs believes that horse passports will be issued commercially by non-public bodies. Under VAT law the services of non-public bodies are normally subject to VAT when a price is charged.

§ Lord Dixon-Smith
My Lords, I am grateful to the Minister for that explanation. Does he agree that there is an unfortunate coincidence in type, if not in practice, and in who issues the passports? Did the Government look sufficiently carefully at parallel issues before coming to a conclusion?

§ Lord Davies of Oldham
My Lords, our VAT laws are quite specific and are drawn up in the context of the European position on VAT. They are as stated, that if horse passports were issued by a public body—I understand that they will not be so issued—they would not be subject to VAT. But we are mindful of the fact that there is potential discretion in this area and we are aware that representations are being made. Therefore, the mind of the Treasury is not entirely closed on the matter.

§ Lord Livsey of Talgarth
My Lords, would it not be better if horse passports were issued by a public body and if there were no VAT on them? In Wales the value of some horses being exported can be as low as £25. That can be the value of a pony. If that is the case, surely the administrative costs alone would mean that it would not be worth enforcing VAT on such passports.

§ Lord Davies of Oldham
My Lords, that may be an area for further discussion, but the noble Lord will recognise that the most convenient way for horse passports to be issued is through the various horse associations. They are private bodies and are therefore subject to the law.

§ Lord Campbell-Savours
My Lords, could not such work simply be transferred to Workington, my former 768 constituency, where there is the cattle traceability centre? That is precisely the kind of work that the centre has been doing for a long time.

§ Lord Davies of Oldham
My Lords, I am grateful to my noble friend for that constructive suggestion. I am reflecting the fact that we are aware that this is an irksome problem and one that appears to have an element of unfairness about it. The issue with regard to cattle, subject to public regulation and the issuing of passports, is different and does not suffer the incubus of VAT. Representations, such as that made by my noble friend, may prove to be helpful.

§ Baroness Masham of Ilton
My Lords, will very old family ponies that will never go into the food chain be required to have passports?

§ Lord Davies of Oldham
My Lords, the issue of the requirements of horse passports is a little remote from this Question which concerns purely the taxation element. I hear what the noble Baroness says. She will recognise that there is always the matter of definition when it comes to the issue of documents such as animal passports.

§ Baroness Byford
My Lords, does the Minister accept that the whole scheme is a sledgehammer to crack a nut? Much more thought could have been given to the proposition when it was first produced. The Minister has clearly said that VAT will be charged because other organisations will have to collect it. Defra must have known that in the first place, so when the department came up with the original scheme why did it not put it through as a government scheme? It would help if the Minister could assure the House that the matter will be reconsidered. It is typical of Defra to fall down in its duty to come up with a proper scheme, a scheme that is not welcome in the country.

§ Lord Davies of Oldham
My Lords, Defra was responding to a very real issue with regard to the transport of animals and the transfer of animals across borders. I hear what the noble Baroness says and that is why I have indicated that representations are being made and the Government are in listening mode.

§ Lord Cope of Berkeley
My Lords, the Minister has just said that a European directive somehow inhibits the Government from moving on this matter. I have some knowledge of such matters, but off the top of my head I do not know the directive. Which European directive inhibits the Government from moving on the matter if they wished to?

§ Lord Davies of Oldham
My Lords, it is Directive 6, governing VAT, which allows public bodies and 769 statutory bodies not to have charges of VAT placed upon them; whereas non-public bodies, of course, do not fit into that category.

Lord Acton
My Lords, can my noble friend say how many horse passports are issued each year and how much VAT is raised?

§ Lord Davies of Oldham
My Lords, we are at the beginning of the scheme so at present I do not have those figures.

§ Baroness Byford
My Lords, perhaps I may help the Minister. At the moment horse passports are held by breeders and people who compete internationally. This is a totally different scheme which ensures that horses that have been given certain drugs cannot be used for human consumption. It is a totally new scheme. My question concerned Defra's mess. The scheme should have been introduced back in December. It has now been delayed until July, so it is not due to come into being until July. That is part of the problem and it is why we are trying to get the imposition of VAT reconsidered.

§ Lord Davies of Oldham
My Lords, that may be a subtle way of the noble Baroness asking her question twice, but I shall not answer it twice.