§ Sir Philip Goodhartasked the Chancellor of the Exchequer if he will make a statement about the payment of value added tax by Government Departments and by health authorities in respect of contracted-out services.
§ Sir Geoffrey HoweUp to now, Government Departments and health authorities have had to bear value added tax on contracted-out services which are acquired for non-business purposes. I shall be seeking powers in this year's Finance Bill to refund payments of VAT both to Government Departments, and to health authorities, 229W where such services have been put out to private contractors. This will remove a possible distincentive to the use of outside contractors when it would otherwise be cost-effective to do so.
§ Mr. Timothy Smithasked the Chancellor of the Exchequer whether he will make a statement about the impact of value added tax on pension funds.
§ Mr. Bruce-GardyneThe commissioners of Customs and Excise have been reviewing all matters relevant to the impact of VAT on pension funds and have held informal discussions with the National Association of Pension Funds. The review has now been concluded and, following counsels' advice, the commissioners are prepared to accept that input tax may be claimed by an employer in respect of administration services supplied on or after 1 April 1982 in connection with a funded pension scheme providing pension arrangement for his employees. A VAT leaflet giving details of the changes will be issued as soon as possible.
However, I see no case for any change in the law designed to give a special input tax relief to pension fund trustees or employers. In so far as the assets of pension funds give rise to exempt supplies—for example, securities, property—the VAT incurred in making such supplies is not in principle recoverable as input tax and there are insufficient grounds for singling out pension funds for special treatment in this respect.