HL Deb 09 December 1998 vol 595 cc95-6WA
Lord Stoddart of Swindon

asked Her Majesty's Government:

Whether, with reference to the transitional arrangements permitted by the Sixth VAT Directive of the European Community (1997), they will:

  1. (a) detail those items of transactions which are currently exempt or carry a zero rate of tax in the United Kingdom;
  2. (b) set out the relevant part of the directive which provides for their transitional exemption; and
  3. (c) specify the latest designated date for the ending of such arrangements applicable to those exemptions. [HL200]

Lord McIntosh of Haringey

Under the Sixth VAT Directive "transitional" arrangements, the UK is able to exempt or zero rate a number of transactions and items. The two main ones allow the UK to: retain all its current zero rates on social items such as food, public transport, books and newspapers and children's clothing (Article 28(2)(a) of the Sixth VAT Directive 77/388/EEC); and exempt from VAT burials and cremations and building land (Article 28(3)(b) of the Sixth VAT Directive 77/388/EEC).

It was originally envisaged that the transitional arrangements would only last until 31 December 1996 when they would be replaced by a "definitive" (common) VAT system. However the Commission has not yet put forward legislative proposals for key elements of the replacement Common VAT system. Until it does so and they are unanimously agreed by member states, the "transitional" arrangements continue automatically.