§ Mr. Nicholas Baker
asked the Chancellor of the Exchequer if he will review the treatment of motoring expenses for value added tax introduced by the Finance Act 1986, and in particular the assumption by the Inland Revenue that an agricultural business in a rural area will undertake 500 miles of private motoring per month.
§ Mr. Brooke
Customs and Excise will be monitoring the effects of the scheme carefully in the first year or two of operation: in any case, the Government are required to review the level of the scale charges on an annual basis, under the terms of the European Community derogation which had to be obtained before the scheme could be introduced.
Under the scheme, VAT is charged according to a fixed scale where fuel used for private motoring is paid for by a business which recovers the input tax on its purchase. The scheme is intended to produce a broadly reasonable result without the need for detailed mileage records to be kept. It applies to all such motoring, and does not make assumptions about agricultural as compared with other classes of businesses.