§ Sir David SteelTo ask the Chancellor of the Exchequer how he intends to respond to the representations he has received concerning the EC Directive on Second Hand Goods and the possible imposition of VAT on the sale of second hand goods.
§ Mr. LamontThe Sixth VAT Directive requires tax to be charged on the full selling price of all goods and services unless otherwise relieved. Although there is no general relief for second hand goods, there are special schemes for certain of these goods including works of art, antiques and collectors' items under which tax is charged only on the seller's margin.
The draft Seventh VAT Directive which requires unanimity for its adoption proposes a harmonised scheme which will in general extend this relief to other second hand goods. The Government have taken into account the representations it has received in establishing its negotiating position. My right hon. Friend the Paymaster General has received representations from both the fine art trade and the Charities Tax Reform Group and is fully aware of their concerns.
Any changes to the United Kingdom's current zero rates would require unanimity for adoption and we cannot therefore have unacceptable changes forced upon us. I refer the hon. Gentleman to my right hon. Friend the Paymaster General's response to a question from the hon. Member for Leeds, West (Mr. Battle) on 17 June, Official Report, columns 539–40.