§ Lord Kennetasked Her Majesty's Government:
What is the value to the United Kingdom of the financial service industry; what is the economic character of that value; why is VAT not levied on the industry; and, if it were levied at the average rate, what would be the return to the Exchequer. [HL2645]
§ Lord McIntosh of HaringeyThe annual value to the United Kingdom of the financial service industry is variable. Annual figures are available in table 4.1.1 of the publicationUnited Kingdom National Accounts 1998. For comparison purposes, annual figures for the whole are available in table 2.1 of the same publication.
Under European law, a range of financial services are specifically exempt from VAT. The United Kingdom is required to give effect to this exemption in domestic legislation.
The estimated revenue increase from removing the VAT exemption for financial services and taxing them at the standard rate of VAT is £100 million, as published in table C of HM Customs and Excise 1997–98 annual report.