§ Mr. AllenTo ask the Chancellor of the Exchequer how much revenue is forgone by having a lower VAT rate of 2½ per cent. rather than 17½ per cent. on imported works of art; and if he will make a statement on the impact of the seventh VAT directive on this.
§ Sir John CopeAt present works of art are exempt from VAT at importation into the United Kingdom. Under a derogation from the seventh VAT directive agreed in principle at ECOFIN on 13 December the United Kingdom will apply the standard rate of VAT to one-seventh of the value of works of art at importation. This is expected to yield in a full year about £2 million. To apply the standard rate to the whole value would yield more if the market were unaffected but in practice the amount would depend on the effects of such a measure on the United Kingdom art market.