Clause 96 - VAT: museums and galleries
Finance Bill
4:45 pm
Mr Edward Davey (Kingston and Surbiton, Liberal Democrat)
I thank the Paymaster General for replying in such a positive way to our debate on clause 95, particularly given the time constraints. I wrote to her with a point about this clause from the Charities Tax Reform Group, to get clarification in the context of official advice. We, and the charities group, were concerned that if a person, in this case a charity, took up the special offer within the VAT refund scheme of being effectively zero-rated for VAT, but had previously sold assets when it transferred from being a business to a non-business, tax could be due and could be collected by Customs and Excise. That person would have had an incentive not to follow the Government's lead but to counter the Government's intention.
On 3 May the Paymaster General wrote to me saying:
``we accept that this should not happen of the bodies that will be the subject of the special VAT scheme. Customs and Excise are developing a workable solution to this so that when the museums and galleries in question do move to universal free access, there will be no clawback of the VAT correctly recovered while they have been charging for admission.''
The Paymaster General set out the reasons why that had not been covered in the legislation; they are incredibly complex, and involve three separate areas of VAT law. She went on to say:
``We have therefore decided to resolve this issue outside the current Finance Bill. Before the scheme is introduced on 1 September 2001, we will ensure that there are special arrangements in place for each museum and gallery affected in this way designed to suit their individual circumstances.''
It is important that we have that on the record, so that the staff of museums and galleries who read our proceedings do not have to worry about that point. In some cases it could involve hundreds of thousands, if not millions, of pounds. The Paymaster General's reply was extremely helpful and I thank her for her assistance.