§ Mr. Alex CarlileTo ask the Chancellor of the Exchequer if he will review the requirement that VAT is paid on the sale and purchase of horses; and if he will make a statement.
§ Mrs. Gillian ShephardThe VAT rate for horses in the United Kingdom is 17.5 per cent. Under the normal VAT rules it is not possible to remove the requirement that VAT is paid on the sale and purchase of horses. Under both current EC law and the agreement reached by the Council of Ministers of 24 June, member states are not able to introduce new zero rates.
However, in an effort to achieve a fair competitive climate within the Community and to prevent the potential distortion of competition which could arise because of a disparity in VAT rates on horses between the United Kingdom, Ireland and France, the Government have authorised discussions between officials and industry representatives about the possible introduction in the United Kingdom of an agricultural flat rate scheme as provided in the sixth VAT directive. This scheme could put farmers/breeders of horses on a more level playing field with their competitors in other member states where such schemes operate and include the breeding and rearing of horses.
§ Mr. Alex CarlileTo ask the Chancellor of the Exchequer if he will make representations to the European Community Council of Ministers for VAT not to be payable on the sale and purchase of horses; and if he will make a statement.
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Mrs. Gillian ShepherdApart from our inability under EC law to introduce zero rates, the Government do not see any justification for zero-rating the sale and purchase of horses. Zero rates are intended to be exceptional and to meet a social need: this would not apply in the case of supplies of horses.