§ Mr. BeithTo ask the Chancellor of the Exchequer what steps he has taken or intends to take to secure extension of the derogation permitting the continuation of VAT zero rating in the United Kingdom beyond 1996.
§ Sir John CopeAt ECOFIN on 24 June 1991, all member states agreed that, under transitional agreements to last until at least the end of 1996, member states which at 1 January 1991 applied zero rates of VAT to certain goods and services in accordance with the provisions of Community law then in force would have the option of retaining them.
The Sixth VAT Directive 77/388/EEC, as amended, provides that the transitional period will continue beyond the end of 1996 if there is not unanimous agreement of the definitive VAT system to operate from that date. The United Kingdom has made it clear that one of the conditions for such an agreement must be our right to continue with zero rates.