VAT (Second-hand Businesses) (Hansard, 9 November 1988)

§ Mr. Dobson
To ask the Chancellor of the Exchequer (1) if he will list those commodities in which second-hand businesses may deal which(a) are zero-rated for value added tax purposes, (b) are exempt from value added tax, and (c) result in value added tax being paid on profits made from transactions rather than on total sale prices;
(2) if he will list those commodities in which second-hand businesses may deal on which value added tax is payable in full and on the sale price of the commodity rather than the profit made by its transaction;
(3) whether he will make a statement about the variety of value added tax positions facing second-hand businesses.

§ Mr. Lilley
[holding answer 7 November 1988]: European Community VAT rules, to which the United Kingdom adheres, require tax to be charged on the full selling price of supplies of goods and services unless otherwise relieved. There is no general relief for second-hand goods. However, there are limited special schemes for certain second-hand goods under which tax is charged only on the seller's margin i.e. the difference between the buying and selling price. The commodities for which special schemes exist are:

second-hand cars;

works of art, antiques and collectors' pieces;

second-hand motor cycles;

second-hand caravans and motor caravans;

second-hand boats and outboard motors;

second-hand aircraft;

second-hand electronic organs;

second-hand firearms;

second-hand horses and ponies.

243W
Commodities which are zero-rated or exempt when new remain so when sold second-hand.

§ Mr. Dobson
To ask the Chancellor of the Exchequer whether the European Commission is considering making any proposal for a general relief from value added tax for second-hand goods; and what is Her Majesty's Government's policy towards such a proposal.

§ Mr. Lilley
[holding answer 7 November 1988]: In November 1987, the European Commission withdrew its proposal for a seventh VAT directive, which would have established a uniform system for second-hand goods. The Commission is expected to make a new proposal for a seventh directive; a United Kingdom position cannot be established until the details of any new proposal become known.

§ Mr. Dobson
To ask the Chancellor of the Exchequer whether he is taking any steps to promote a general relief from value added tax for second-hand goods throughout the European Community.
244W

§ Mr. Lilley
[holding answer 7 November 1988]: No.