§ Mr. McQuarrie
asked the Chancellor of the Exchequer what representations he has received from charities' organisations regarding the effect of the extension of value added tax to building alterations as proposed in his Budget statement; and what action he proposes to take on representations which are made to him on this matter.
§ Mr. Hayhoe
[pursuant to his reply, 22 March 1984, c. 531–32]: My right hon. Friend has received a letter dated 15 March from the chairman of the Charities' VAT report group about this matter. We had already been considering the impact on the handicapped of the decision announced in his Budget statement to tax building alterations as alterations to buildings to suit the condition of a handicapped person will no longer enjoy zero-rating under the general relief for construction; but nor do they qualify at present under the relief for aids for the handicapped contained in group 14 to the zero-rate schedule to the Value Added Tax Act 1983. It has therefore been decided to widen items 3 and 4 of this group by means of a Treasury order which will be made and laid shortly, and will come into operation on 1 June. The effect of the order will be to allow relief for services supplied either to an individual person, or to a charity, which facilitate entry to or movement within any building by a handicapped person — for example, the construction of ramps and the widening of doorways and passages. There will also be a specific provision zero-rating the first-time installation on the ground floor of a bathroom, washroom or lavatory specifically needed to suit the needs of a handicapped person, provided the building is used wholly as a private residence.253W
This relief will continue to provide zero-rating for alterations which are very important for the handicapped, but we recognise that by no means all construction for or on behalf of the handicapped will be covered. However, my right hon. Friend does not consider that a wider relief preserving the exact pre-Budget position would be justified.