§ Mr. BurnsTo ask the Chancellor of the Exchequer if he will review the VAT rules under which tax is currently charged when redundant factories are converted into social housing; and if he will make a statement.
§ Mr. Kenneth ClarkeI am pleased to announce that today Customs have published draft legislation which, subject to the approval of the House, will enable such conversions to be free of VAT. Customs have also announced that by concession the change will be operative from today. The result will be that the sale of any dwelling that is created by the conversion of a non-domestic building will be free of VAT. The relief will also apply to DIY builders who, for example, convert redundant barns into dwelling.
427WAdditionally the proposed draft legislation amends the list of items installed in new dwellings on which input tax cannot be reclaimed. This relaxation will also operate from today by concession.
These two measures will result in approximately £20 million per annum being injected into the house building industry in terms of VAT revenue forgone. The proposed legislation will also simplify the application of a complex part of the VAT legislation, remove ambiguities and clarify the existing law.
A copy of the proposed legislation has been deposited in the Library.