HC Deb 22 January 1988 vol 125 cc876-7W
Sir Anthony Grant

To ask the Chancellor of the Exchequer what discussions he has had in the EEC with a view to raising the level at which small firms become liable for value added tax and with what result; and if he will make a statement.

Mr. Lilley

[holding answer 19 January 1988]: The EC Sixth VAT directive restricts increases in the VAT registration threshold to those which maintain its value in real terms. Removal of this restriction would require an amendment to article 24 of the directive, which would require the unanimous approval of the member states.

In her address to the European Council in March 1985 the Prime Minister launched an initiative for deregulation to encourage the growth of small businesses. Late in 1986 the Commission produced a draft directive for small and medium-sized enterprises which proposes, among other things, a mandatory lower threshold of 10,000 ecu (about £7,000) and a higher optional threshold of 35,000 ecu (about £24,500).

The European Parliament has given general support for the draft. The United Kingdom will maintain its insistence that the optional higher threshold be no less than 35,000 ecu and will continue to argue vigorously for it to be increased. It is not possible to forecast when and in what form the directive will be adopted.