Value Added Tax

HC Deb 18 May 1984 vol 60 cc269-70W

Mr. Snape

asked the Chancellor of the Exchequer (1) what representations he has recently received about the imposition of value added tax on ex-service organisations and in particular the British Legion; and if he will make a statement;

(2) if he has any plans to relieve ex-service organisations of value added tax.

Mr. Hayhoe

During the last three months my Treasury colleagues and I have received a total of 27 representations from ex-service organisations regarding a general VAT relief for charities and similar bodies. Of this total, some 18 originated from secretaries of branches of the Royal British Legion.

There are already a number of specific reliefs from value added tax which are of significant benefit to charities which care for the handicapped and the disabled, such as ex-service organisations. Goods which are donated for sale by such organisations are zero-rated on sale. In addition a wide range of medical equipment (including ambulances) used in medical research, diagnosis or treatment is relieved. This relief also covers the purchase of equipment and appliances solely for the use of handicapped persons, either in their own homes or in a charitable institution which cares for the handicapped. The hire of any of the above goods by a charity and the services of repair and maintenance are also relieved.

The Government have carefully considered the requests for a wider relief from VAT on all the non-business purchases of charities generally, including ex-service organisations, but have concluded firmly against it for three main reasons. First, VAT relief would give a very uneven spread of benefits.

The actual sums going to each body would depend on its pattern of spending rather than the level of public support it enjoyed. Second, it would be expensive. Precisely how much it would cost is not calculable, but it would certainly run into tens of millions of pounds of revenue which would have to be raised from other sources. Third, the size and administrative complexity of a relief scheme would make it a very wasteful and inefficient way of helping charities.