§ David DavisTo ask the Chancellor of the Exchequer (1) what notice was given of changes to VAT exemption for welfare services; [104529]
(2) what measures he has introduced to compensate private welfare agencies for the loss of input VAT recovery as a result of changes to VAT exemption; [104531]
(3) what plans he has to treat the provision of welfare services as being zero rated for VAT purposes rather than exempt. [104530]
§ John HealeyThe Government's introduction of VAT exemption for welfare services provided by state-regulated private welfare agencies means that the 60,000 sick, elderly or disabled people who pay for home care services will no longer have to pay VAT on these services and we estimate that they could see a reduction in costs of up to 13 per cent.
I announced that this exemption would be available from 31 January 2003 in a written Ministerial statement on 19 December 2002, Official Report, column 8OWS. Independent fostering agencies, whose supplies are to local authorities, may choose to postpone changing the VAT treatment of their supplies until 1 April while they make the contractual and financial arrangements that are necessary for them to implement the change. Other commercial welfare agencies are required to implement the change when they become state-regulated, the earliest date for which is 1 April 2003.
It is a fundamental principle of the VAT system that businesses may only recover VAT relating to taxable supplies. Commercial providers of VAT-exempt 255W services will take a range of commercial factors, including overheads such as irrecoverable VAT, into account when setting their prices.
There are no plans to introduce a zero rate of VAT for commercially provided welfare services, since we are prevented from doing so by long-standing formal agreements with our European Union partners.
§ Mr. CousinsTo ask the Chancellor of the Exchequer how many cases of VAT evasion in the building repairs and maintenance industry Customs and Excise have(a) investigated and (b) secured additional VAT payments from in the last three financial years. [104726]
§ John HealeyThe information requested is not kept by HM Customs and Excise.
§ Mr. CousinsTo ask the Chancellor of the Exchequer what pilots he has conducted under the European Directive on VAT reduction tested; what the results were; and how these results compare with similar pilots in other EU states. [104727]
§ John HealeyWe have conducted no pilots under the EC experiment to apply reduced VAT rates to certain `labour intensive services', believing that there are currently more effective, better-targeted ways of increasing employment in the United Kingdom. An evaluation of the experiment is due to take place during 2003 in the context of the European Commission's planned review of the provisions governing the use of VAT reduced rates in the EU.