§ Mr. Peter Millsasked the Chancellor of the Exchequer why market stall rents are now subject to value added tax after being exempted for so long; and if he will make a statement.
§ Mr. Robert SheldonI will let the hon. Member have a reply as soon as possible.
§ Mr. Trotterasked the Chancellor of the Exchequer why payments made for the audit of a company's pension scheme are not allowable to the company for value added tax purposes when they are so allowable for income tax purposes; 508W and whether he will take steps to change this situation.
§ Mr. Robert SheldonThere are differences of principle and law in the charge of income tax on incomes and profits and that of value added tax on supplies of goods and services. In general VAT is deductible by a registered person on supplies to him for the purpose of his business. However, a pension fund is normally set up by an employer by vesting its assets in independent trustees under an irrevocable trust. As was recently confirmed by a VAT tribunal, the audit of a company's pension scheme are supplies to the trustees, and are not supplies to the company even though they are paid for by the company. Hence the VAT on such supplies is not deductible by the company.