HC Deb 15 April 1991 vol 189 cc25-6W
Mr. Steinberg

To ask the Chancellor of the Exchequer how much income to the Treasury it is anticipated that the increase of 2.5 per cent. in value added tax for 1991–92 will raise.

Mrs. Gillian Shephard

The information is published in table 1.1 of the Financial Statement and Budget Report 1991–92.

Mr. Steinberg

To ask the Chancellor of the Exchequer how much was raised in 1989–90 from value added tax.

Mrs. Gillian Shephard

A total of £29,483 million. Further information is available in the 1989–90 report of the Commissioners of Her Majesty's Customs and Excise.

Mr. Atkinson

To ask the Chancellor of the Exchequer whether the balance of the cost of holiday accommodation for which deposits have been received by hotels and guest houses as part of an advanced booking contract, will be subject to the increased VAT rate; and if he will make a statement.

Mrs. Gillian Shephard

The increased rate of VAT will apply to any balance outstanding from the date of the rate change—1 April—on holidays booked in advance. This is because the normal tax point for the supply of a holiday is when the services are performed by the hotel or guest house. While an earlier tax point is created by the receipt of a deposit—advance payment—it applies only in respect of the amount of money paid over. Guidance in VAT publications make this clear, as well as covering the position when there is a VAT rate change.

Mr. Atkinson

To ask the Chancellor of the Exchequer what representations he has received from the tourism industry on the effect of the increase in VAT on advance holiday bookings; and if he will make a statement.

Mrs. Gillian Shephard

I have received a number of representations. These have primarily concerned the need for a concession to be introduced whereby the old VAT rate of 15 per cent. would apply to any outstanding balances on holidays pre-booked before the date of the rate change, because otherwise the industry might have to absorb the increase. I am unable to accede to this request because of the existing tax point rules—which reflect EC law. The normal tax point for the supply of a holiday is when the services are performed by the hotel or guest house. While an earlier tax point is created by the receipt of a deposit—advance payment—this applies only to the amount of money paid over that time.