Financial Services

House of Lords written question – answered on 30th March 2006.

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Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

asked Her Majesty's Government:

Whether they have made an assessment of the impact on consumers of banking and financial services of the proposal by the European Union to make such services subject to VAT; and whether they will consider using their veto to prevent this.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

The European Commission has not proposed charging VAT on supplies of financial services to consumers. As part of a public consultation, it is seeking views on a number of options to modernise the current rules and address VAT issues facing the sector.

The Government welcome this review of the VAT treatment of financial and insurance services: it gives member states the opportunity to modernise the existing legislation, which has been in place since 1977.

The review is at an early stage. The Government are working with interested business groups to ensure that the UK position is fully informed by an understanding of the potential impact of any future proposals on government revenues, the financial services sector and UK consumers.

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