VAT (Digital Services)

Oral Answers to Questions — Culture, Media and Sport – in the House of Commons at 9:30 am on 15 January 2015.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Foreign and Commonwealth Affairs) 9:30, 15 January 2015

What discussions he has had with the Chancellor of the Exchequer on the effect on musicians and other creative professionals of EU proposals to change the way VAT is charged on digital services.

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

The changes relate to the announcement in the 2013 Budget and came into effect on 1 January 2015. Her Majesty’s Revenue and Customs established an external working group to consider their effect on small and medium-sized businesses. The Treasury and HMRC are actively engaging with it.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Foreign and Commonwealth Affairs)

I thank the Minister for that response and for agreeing to reinstate the question after his officials tried to transfer it to the Treasury. That was very kind of him. As he will know, musicians are very concerned that they will end up having to fill out quarterly VAT returns for very small sources of income. If they sell their music through iTunes or Bandcamp, they will perhaps do the administration for them, but it is a real issue if they have to handle it themselves. I urge the Minister to take part in those discussions with the Treasury and ensure that the voices of musicians and other people in the creative sector are heard.

Photo of Ed Vaizey Ed Vaizey Minister of State for Culture and the Digital Economy (Jointly with Department for Business, Innovation and Skills), Minister of State for Culture and the Digital Economy (Jointly with Department for Culture Media and Sport)

I would never dodge a question from the hon. Lady, particularly as she represents the constituency of Bristol East, where I stood famously in the 1997 election and turned a 5,000 Labour majority into a 17,000 Labour majority. The changes will protect and increase revenue. The hon. Lady is a great champion for the music industry. I take on board her point and I will certainly engage with HMRC.