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Value Added Tax

Volume 940: debated on Monday 28 November 1977

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asked the Chancellor of the Exchequer, in the light of the comment of the Chairman of the Value Added Tax Tribunal in the case of Morton v. H.M. Customs and Excise that it seemed a pity that the artistic reconstruction of a derelict and uninhabitable seventeenth century structure in the countryside in accordance with planning permission should not qualify for tax refund whereas construction of a modern house did, if he will amend the value added tax rules so as to allow refunds on the reconstruction of uninhabitable buildings.

No. The VAT refund scheme for "do-it-yourself" house-builders covers only the construction of complete new dwellings. It would not be practicable to differentiate between reconstruction and other work undertaken in respect of existing buildings.

asked the Chancellor of the Exchequer why it was only recently that the value added tax authorities discovered that boat owners on the Norfolk Broads were not charging higher rate value added tax on the hire of dinghies.

It is the responsibility of VAT-registered traders to account for tax due on the taxable supplies made in the course of their business, and it would be neither practicable nor economical for VAT officers to examine every aspect of a trader's business during each periodic visit. It was discovered during a recent routine control visit that certain boat owners were not charging the higher rate of VAT on hirings of dinghies as optional extras to cabin cruisers used as holiday accommodation. Guidance on the application of different rates of VAT is given in Customs and Excise Notice No. 701, which is issued to all registered traders.

asked the Chancellor of the Exchequer whether higher rate VAT is chargeable on the hire of a dinghy if the dinghy in question is hired with a cabin cruiser itself charged at standard rate and the dinghy is needed for life-saving purposes.

The hire of a dinghy for a period of more than one day is chargeable at the higher rate of VAT. It would be impracticable to distinguish for the purposes of VAT between dinghies according to the use to which they might be put. However, liferafts which comply with the Merchant Shipping (Life Saving Appliances) Rules 1965 are specifically excluded from the higher rate and are chargeable at 8 per cent.

asked the Chancellor of the Exchequer if he will take steps to make items of essential use for disabled persons, such as the chin-controlled BEC chair, exempt from value-added tax.

The supply of essential aids and appliances to chronically sick or disabled persons for domestic use is already zero-rated under item 2 of Group 14 of Schedule 4 to the Finance Act 1972 provided the aids or appliances have been designed solely for the relief of a severe injury or abnormality and the supply is supported by a medical certificate. A chin-controlled BEC chair comes within the scope of this zero rating.