§ Lord Pearson of Rannochasked Her Majesty's Government:
How the EC Sixth VAT Directive restricts changes to eligibility to recover VAT.
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§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)Under Article 17 of the EC Sixth VAT Directive, businesses are entitled to recover tax incurred on purchases of goods and services used for the purposes of making taxable supplies. However, most member states have found it necessary to restrict the right to deduct VAT on purchases of certain goods and services, particularly those which are likely to be used for both business and private purposes. Paragraph (6) of the article provides for the Council to adopt harmonised rules on what is not to be eligible for deduction; tax is not to be deducted on expenditure which is not strictly business expenditure, such as that on luxuries, amusements or entertainment. Until the harmonised rules come into force, member states are permitted to retain all national input tax restrictions in place on 1 January 1978 (the date the directive came into force) but may not introduce any new ones.
§ Lord Pearson of Rannochasked Her Majesty's Government:
Whether they will list those bodies which are able under Section 33 of the Value Added Tax Act 1994 to recover VAT.
§ Lord Mackay of ArdbrecknishThe public bodies eligible for refunds of VAT under Section 33 of the VAT Act 1994 are too numerous to be individually identified. In addition to the general categories listed in Section 33(3)(a) to (j), other bodies such as the National Rivers Authority, the Environment Agency, probation and magistrates' courts committees have been added from time to time under Section 33(3)(k).