HC Deb 18 April 1991 vol 189 cc238-9W
17. Mr. Winnick

To ask the Chancellor of the Exchequer what representations he has received over the increase in value added tax.

Mr. Maude

My right hon. Friend has received many representations over the increase in the rate of VAT.

Mr. Hill

To ask the Chancellor of the Exchequer what is his policy on companies charging value added tax at 17.5 per cent. on goods and services supplied between 1 January 1991 and the date of his Budget statement; and if he will bring forward proposals to prevent companies from back-dating the increase in value added tax.

Mrs. Gillian Shephard

The normal rules for working out the date for VAT purposes—the tax point—apply when there is a change of rate. This entitles traders to apply the old rate—15 per cent.—to goods or services supplied before 1 April—the date from which the rate was increased to 17.5 per cent. Moreover, even where the issue of a tax invoice after 1 April would have created a tax point at the new rate, there is in existence a concession to the normal rules which allows traders to apply the old rate, as long as the goods or services were supplied prior to 1 April. There is therefore no question of the Government forcing companies to backdate the increase in VAT.

Where companies do not take advantage of the concession available, perhaps because of administrative difficulties, this is a matter for their own commercial judgment, of course, taking account of relations with their customers.

Mr. Knapman

To ask the Chancellor of the Exchequer how much revenue would be raised by charging value added tax at 17.5 per cent. on those goods and services which are at present exempt from value added tax.

Mrs. Gillian Shephard

The effect of applying VAT to the exempt sector cannot readily be determined, because some of the outputs such as financial services are difficult to value or tax. An estimate could be prepared only at disproportionate cost. Estimates of the cost of zero-rating are in table 4B.1 of the "Financial Statement and Budget Report".

Mr. David Marshall

To ask the Chancellor of the Exchequer what percentage of gross earnings value added tax took up for a family on average male earnings with two children in(a) 1978–79 and (b) 1989–90.

Mr. Maude

Approximately 2.7 per cent. of gross earnings and 5.0 per cent. respectively.

Mr. Barry Field

To ask the Chancellor of the Exchequer what representations he has had about value added tax misdeclaration penalties from the hon. Member for the Isle of Wight.

Mr. Norman Lamont

I am aware that my hon. Friend has made representations to Treasury Ministers expressing concern about the operation of the penalty regime.

In my Budget statement I acknowledged these concerns and announced the setting-up of a thorough review of the penalty regime with a view to legislation for changes in the 1992 Budget. The review will include full consultation with the accountancy profession and business interests and all constructive proposals will be carefully considered. Pending the outcome of the review the rate of penalty was reduced from 30 to 20 per cent. from 20 March 1991 and relaxations were introducted by Customs.

Differences1 in local authority expenditure between the 1990 public expenditure White Paper and the statistical supplement to the Autumn statement
£ million
1985–86 1986–87 1987–88 1988–89 1989–90
Subsidies -12 -23
Pay 64 86 225 93 623
Other current expenditure on goods and services -106 -100 -127 -215
Subsidies -12 -23
Current grants to persons 38 56 -51 51 23
Net capital expenditure on assets 4 -21 -13 200 841
Capital grants 1 21 16 78 108