§ Sir Richard BodyTo ask the Chancellor of the Exchequer for what reason an interim VAT band was established for the United Kingdom art market; what effect the VAT raise has had on turnover; and what representations he is making to the Commission on the subject. [22616]
§ Dawn Primarolo[holding answer 12 January 1998]: Goods imported into the UK normally bear VAT at the Standard rate (17.5 per cent.). Under the terms of EC law introduced in 1995 certain works of art, antiques and collectors' pieces imported into the UK are eligible until 30 June 1999 for an effective rate of VAT at importation of 2.5 per cent.
The fine art trade's published overseas trade statistics indicate that, since 1995, there has been a reduction in the annual values of UK imports of works of art, antiques and collectors' pieces from non-EC countries. It is readily acknowledged by representatives of the fine art trade that, in such a highly competitive global market, a variety of factors may have contributed to the apparent decline in imports.
During 1998, the EC Commission is expected to review the effects of the relevant EC legislation on the competitiveness of the Community art markets compared to third countries' art markets. The relevant Government departments are working closely with art trade bodies to evaluate those effects, and to try to ensure that the position of the UK's fine art market will be properly represented in that review.