§ Mr. Shersbyasked the Chancellor of the Exchequer whether he is satisfied with the arrangements whereby the Customs and Excise authorities insist on value added tax being paid on the replacement of an outdated and inefficient oil-fired domestic boiler by a modern purpose-built one which results in lower oil consumption whereas they do not require payment of value added tax on extension of domestic oil central heating systems by adding additional radiators and larger water calorifiers causing greater oil consumption; and whether he will consider changing this ruling.
§ Mr. Peter ReesLiability to VAT is governed by the relevant provisions of the Finance Act 1972. Under the provisions applying to building construction work, a supply in the course of the alteration of a building may be zero-rated. Work of repair or maintenance, however, is specifically excluded from such relief and is chargeable at the standard rate. My hon. Friend's example illustrates the operation of this borderline.
I am reviewing the liability of construction industry supplies, but as a wide-ranging tax on consumer expenditure generally, with strictly limited reliefs, VAT is not really suited to fine adjustment to reflect every aspect of the Government's non-fiscal policies.