§ Mr. CousinsTo ask the Chancellor of the Exchequer what repayments of VAT in respect of VAT relief for bad debts were made in the last financial year for which figures are available; and what sum he estimates will be repaid in respect of subsequent financial years.
§ Sir John CopeIn order to keep burdens on business to a minimum, claims for bad debt relief are included with all other amounts of tax entered in traders' VAT returns and separate figures are not available.
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§ Mr. CousinsTo ask the Chancellor of the Exchequer when the 12 month delay on repayment of VAT in respect of bad debts was decided; what representations he has received on this point; and whether he has the matter under review.
§ Sir John CopeSection 11(1)(c), Finance Act 1990, provided for a period of two years, beginning with the date of the supply, to elapse to qualify for bad debt relief. Following representations, that waiting period was reduced to twelve months by section 15(1), Finance Act 1991.
Representations regarding the length of the waiting period are received from time to time and the matter is kept under review.
§ Dr. MarekTo ask the Chancellor of the Exchequer what ruling HM Customs and Excise has made on the VAT liability of controlled circulation magazines mailed to other member states of the EC with a positive rate of VAT; and what are the reasons for this decision.
§ Sir John Cope[holding answer 27 January 1993]: Since 1 January 1993, under the 6th EC VAT directive as amended the tax treatment of goods supplied by VAT-registered traders to non-VAT registered customers in other member states under the distance selling arrangements, including mail order, has been dependent on thresholds. Each member state has adopted a threshold of either 35,000 or 100,000 ecu. If sales to a member state arc beneath that member state's threshold then VAT in the member state of origin is chargeable; in the case of supplies of magazines from the United Kingdom, this would be zero. If sales exceed the threshold laid down by a member state, then all sales to that member state are chargeable at the appropriate rate of VAT in that member state and the trader will need to register for VAT or appoint a tax representative in that member state.
Where supplies are made to customers who are VAT registered in another EC member state, the removal from the United Kingdom may be zero-rated if the VAT registration number of the consignee is shown on the tax invoice, and tax will be due on acquisition by the customer.
These arrangements follow the normal rules that goods are subject to VAT in the member state of destination. Until 31 December 1992 tax was supposed to be paid in accordance with the law in the state where the purchaser was. Since 1 January 1993 the thresholds are a simplification measure so that distance sellers supplying small quantities can apply VAT at the rate applied in the country of origin.