Value Added Tax

HC Deb 14 July 1977 vol 935 cc250-1W

Mr. George Cunningham

asked the Chancellor of the Exchequer, in view of the Government amendment to Schedule 6 to the Finance Bill (No. 77) tabled on 8th July, what progress has been made in drafting a Treasury order to provide exemption from value added tax for members' subscriptions to trade unions and to certain other organisations which at present have an option for registration under Section 45(2) of the Finance Act 1972.

Mr. Robert Sheldon

The proposed new Section 45 of the Finance Act 1972 reintroduced by this amendment now contains a new subsection (3). This is complemented by the proposed draft exemption order, copies of which are available in the Library. The new subsection (3) deals with subscriptions to political, religious, philanthropic, philosophical or patriotic organisations and makes clear that they will remain outside the scope of tax to the extent that the benefits of the subscription flow to the community at large, and do not consist of facilities or advantages confined to the members.

The draft order would maintain the present position of trade unions which are outside the scope of tax under the existing Section 45(2).

As regards professional bodies and learned societies membership of which consists of individuals who have or are seeking a particular professional qualification, or whose employments are directly connected with the purposes of the organisation, item 1(b) and (c) of the draft order maintain, by exemption, the present position chosen by these organisations under the existing Section 45(2).

The EEC Sixth Directive does not provide any exemption for trade or professional organisations with employer or business membership. These are all in principle taxable, and the option to be taxed provided under the existing Section 45(2) cannot, therefore, be repeated. This should, however, involve no change for most trade etc. associations. Over 750 are known to have opted for taxation.

The amendment and draft order are designed to meet most of the concern expressed by hon. Members in Standing Committee D on 26th May.