Clause 25 - Relief from vat on acquisition if importation would attract relief
Finance Bill
11:15 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
First we had anoraks from the right hon. Member for Fylde and now we have woolly jumpers from the hon. Member for Christchurch. One wonders what it will be next. What does the hon. Member for Arundel and South Downs have in store for us? Who knows? However, the hon. Member for Christchurch makes an important and serious point, because we on the Committee must be aware of the effect that our decisions have on business people. It never comes amiss to hear specific examples of perceived impact.
I could read out the entire list of goods covered by the Value Added Tax (Imported Goods) Relief Order 1984 introduced by the previous Conservative Government, but I do not think that I should detain the Committee in that way. However, let me give just a few examples. The goods include items donated for use in charity fund-raising events, forms, tickets and labels sent to UK travel agents by overseas tourist agencies and goods to be used in the construction or
upkeep of memorials dedicated to overseas war victims—a specialist but wide range of items. Therefore, the clause seeks to address a wide-ranging anomaly.
The clause is very modest. It recognises that way back in time there were oversights. In 1992, the term ''imports'' in VAT legislation covered all items brought into this country, whether from within or without the EU, and that meant that VAT relief was available on certain imported goods, regardless of the country of origin. With the onset of the single market, that changed. Goods brought into the UK from other member states came to be known in law as acquisitions. Unfortunately, the then custodians of the VAT legislation overlooked the need to make a corresponding change in the relief on certain imported goods, so the clause now seeks to correct that anomalous situation.
The clause does no more than that. It corrects the anomaly and puts those goods on an equal footing with zero-rated imports, as they should have been since 1993. It is a small technical change that corrects an unnecessary inconsistency in the law. It should be welcomed by everyone who wants a simpler tax system, and I believe that, on reflection, the hon. Member for Christchurch will find that his correspondent's fears about the matter are unfounded.