HC Deb 03 March 1997 vol 291 c472W
Mr. Allason

To ask the President of the Board of Trade what assessment he has made of the extent to which public authorities, with special reference to schools and hospitals, have disproportionately favoured non-VAT registered traders when issuing contracts. [18154]

Mr. Page

The information requested is not available as no assessments have been carried out of the extent to which public authorities contract with VAT registered and non-VAT registered traders.

The Audit Commission tells me that local education authorities—schools—can recover VAT on their non-business activities under section 33 of the Value Added Taxes Act 1994, so have little incentive to favour non-VAT registered traders.

For the NHS—hospitals—as for similar bodies such as banks which cannot recover their input VAT, there is an incentive to favour non-VAT registered businesses. The Audit Commission has no knowledge of this happening on a wide scale and the registration limit of £47,000 for VAT means that non-VAT registered traders may be involved only in very small scale contracts.