§ Mr. Colvin
To ask the Chancellor of the Exchequer if payments made by the Government to firearms dealers under(a) the Firearms (Amendment) Act 1997 Compensation Scheme and (b) the ex gratia compensation scheme for small calibre pistols are subject to VAT. 
§ Dawn Primarolo
Yes. If the dealer is registered for VAT the surrender of pistols against a payment of compensation is a taxable supply for VAT purposes.