§ Mr. HanleyTo ask the Chancellor of the Exchequer what representations he has received from charitable organisations about the value added tax and corporation tax implications of affinity credit card schemes; and if he will make a statement.
§ Mr. RyderMy right hon. Friend has received various representations, including a submission from the Charities' Tax Reform Group (CTRG), since the reply I gave to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) on 7 December 1989, at columns308–09. Customs and Excise and the Inland Revenue have also had discussions with the CTRG about the tax implications of charities' affinity card schemes. It has now been agreed that, with the appropriate contractual arrangements, VAT will be charged on the promotional and other services supplied by the charities, but will not apply to contributions made by the credit card companies for which the beneficiaries are not obliged to do anything in return. The corporation tax treatment of individual schemes will depend on the contractual arrangements, but schemes can be set up in such a way that the charity's income from them qualifies for exemption from corporation tax.