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Value Added Tax

Volume 17: debated on Sunday 11 April 1982

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asked the Chancellor of the Exchequer if he will make a statement on his present policy towards the payment of value added tax by charities.

My right hon. and learned Friend the Chancellor of the Exchequer has informed the charities that we are considering their request for a change in the law whereby charities have always paid purchase tax and later VAT on their purchases. But I must emphasise to the House that such a change, as well as being expensive in staff and revenue, would also give rise to major anomalies.

Is my hon. Friend aware that his reply will give a certain amount of hope to the charities? Is he also aware, however, that there is great feeling on both sides of the House that the imposition of VAT on charities is far too high? Does he not accept that a reduction of this imposition by his right hon. and learned Friend the Chancellor of the Exchequer in his Budget would be welcomed by the whole House?

I am sure that my right hon. and learned Friend has heard my hon. Friend's remarks and that he is well aware of the views of hon. Members. I would point out, however, that there are about 140,000 bodies registered with the Charity Commission as charities. I do not believe that the House would regard all of them as fitting recipients of any relief that might be given.

Is the Minister aware that the doubling of value added tax has meant that, last year, Dr. Barnardo's paid £500,000, the Spastics Society, £218,000, the Royal National Institute for the Blind, £150,000 and the Royal National Institute for the Deaf, £75,000 in VAT? At a time when local authorities are cutting essential services for disabled people, is it not disquieting that these organisations should have to cut back on homes and day centres, meals on wheels facilities and advisory and other important services?

What the right hon. Gentleman says is well known. There is a difficult problem. The right hon. Gentleman must himself acknowledge that there is a difficult problem of definition and that there are many charities to which he would not like the concession to be given.