§ Barbara FollettTo ask the Chancellor of the Exchequer what steps he has taken to reduce the levels of irrecoverable VAT incurred by the British Tourist Authority in the current financial year; and if he will make a statement. [18434]
§ Mr. BoatengThe BTA was awarded £14.2 million of additional funding this year to take forward its recovery plan to boost inbound tourism in the wake of the foot and mouth outbreak. Concern was raised in July that this would lead to the BTA incurring irrecoverable VAT on purchases relating to this programme.
The BTA estimated the irrecoverable VAT would be around £600,000. However, HM Customs and Excise has now reached an agreement with the BTA to allow an increase in VAT recovery to achieve a fair and reasonable result within the existing rules. The agreement addresses the impact of foot and mouth disease upon all of BTA's work, not just the elements funded by extra grant in aid. As a result of this agreement, the BTA estimates that the level of irrecoverable VAT incurred on goods and services purchased as part of its tourism recovery programme has now been reduced by between £300,000 and £500,000.
This agreement ensures that as much as possible of the BTA's grant-in-aid and extra funding will go directly towards helping inbound tourism to recover from a particularly difficult year, while complying with the tax laws which apply to all organisations buying goods and services.
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