§ Mr. SpearingTo ask the Chancellor of the Exchequer what is the proposed rate of value added tax which the Commission of the European Communities proposes to be applied in the United Kingdom to proceeds from the gifts in kind to charities, including proceeds from retail sales; what is the approximate range of annual revenue he would expect to receive at the proposed or current United Kingdom relevant rate from such a tax; what was the date at which such a proposal was first made known to him; what consultations he has had with, and what information he has provided to, the principal charities concerned; what is the response of Her Majesty's Government to this proposal; and if he will make a statement.
§ Mr. Lilley[holding answer 29 April 1988]: The Commission's tax approximation proposals (published in August 1987) would require charity shops to charge VAT on donated goods sold retail. The rate (standard 14–20 per cent. or reduced 4–9 per cent.) would depend on the goods sold. Donations of goods by private individuals would not be affected, as these are outside the scope of the tax. I regret that information which might enable us to estimate the likely revenue yield is not held centrally.
I have received no representations from charities on this subject.
The Government's position, which has been repeated on numerous occasions, is that we are not prepared to accept proposals which would restrict our ability to apply VAT zero rates. Our position is safeguarded because changes to EC tax law require unanimity.