The Government have no current plans for a formal review of the VAT liability of supplies of bait generally. However, Customs and Excise have been asked to contact the fishermen's representatives with a view to identifying specific problems that they may be experienc-ing in the application of the current rules and exploring possible solutions.
The problem is very simple. If an old lady goes to buy some fish for her cat from the fish trader, she pays no VAT. If the same fish is delivered to the quay on a shell fishermen's boat, immediately the fish is delivered for bait he has to pay VAT. That seems a crazy arrangement as anything to do with shell fishermen's boats is zero rated, so why should they pay VAT on that fish when the little old lady does not? More importantly, will the Minister do something to stop the terrible cash flow problems of shell fishermen who face serious difficulties on the south coast of Devon?
I know that my hon. Friend the Member for South Hams (Mr. Steen) has championed the cause of crabbers in south Devon and a particular case of arrears of tax. I am pleased to advise him that Customs and Excise will not be calling for arrears of tax in the particular case about which I know that he is concerned, nor in others where a genuine misunderstanding has arisen as to the correct treatment of supplies of bait. However, VAT is applicable to fresh fish when it is bait and is held up for sale as such.