Charities (VAT)

Oral Answers to Questions — Overseas Development – in the House of Commons at 12:00 am on 17th June 1991.

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Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North 12:00 am, 17th June 1991

To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received about the effect of VAT on charities dealing in famine and disaster relief.

Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey

In 1991 we received four specific representations which raised the question of VAT as the primary issue. Some other representations raised the question with other issues. VAT is a matter for my right hon. Friend the Chancellor of the Exchequer, who amended the legislation in 1989 to ensure zero rating of charities' fund raising, including the sale of donated goods in charity shops.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

Does the Minister accept, however, that charities, especially third world charities, are tremendously concerned that if standardisation takes place throughout Europe, resulting in the loss of zero rating to the charities sector as a whole, some £500 million of income will be lost? For example, Oxfam fears a loss of £5 million. Will the Minister make strong representations to ensure that that does not take place across the board and that there are Europe-wide discussions to draw attention to the problems that loss of zero rating would present for charities?

Photo of Mrs Lynda Chalker Mrs Lynda Chalker , Wallasey

I have considered that matter and discussed it with several non-governmental organisations, including the Oxfam representatives on Merseyside. I assure the House that if the European Community were to challenge the United Kingdom legislation on the zero rating of sales of donated goods from charity shops and refunds of VAT on rents, we would resist. Should the European Community attempt to legislate further on the activities of charities, we would stongly defend their voluntary nature and independence. The hon. Gentleman has my word on that.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I shall take points of order after the statement.