§ Mr. Tim SmithTo ask the Chancellor of the Exchequer whether he will make a further statement, pursuant to that by the Economic Secretary,Official Report, 21 June, column 957, about the timing of the imposition of value added tax on contracts for non-domestic construction.
§ Mr. LilleyAll non-domestic construction work will continue to be zero-rated until 1 April 1989. VAT at the standard rate will then be payable only in respect of work done and paid for on or after 1 April 1989. Any contract entered into prior to 21 June 1988 will continue to be zero-rated for the life of the contract. I should make it quite clear that no VAT will be payable in respect of any construction work done before 1 April 1989.
Provisions to levy VAT at the standard rate from 1 April 1989 will be subject to the House of Commons passing the necessary Budget Ways and Means resolutions, which will be laid before the House in the normal way at the time of the Budget statement. These provisions will also be subject to the enactment of the subsequent Finance Bill in the normal way.