asked the Chancellor of the Exchequer (1) what action he intends to take to assist United Kingdom bloodstock breeders within the European Community regarding the method by which France treats bloodstock for the purposes of value added tax following infraction proceedings;(2) whether he will place in the Library a copy of the letter sent by the Chief Secretary to the Treasury on 30 August 1979 to the chairman of the Bloodstock and Race Horse Industries Confederation Ltd. in which he indicated that the Government would give further and urgent consideration to the problems of the bloodstock industry if early progress was not made within the European Community to harmonise the treatment of value added tax on bloodstock; and what action arose from that consideration;(3) what action he intends to take to assist United Kingdom bloodstock breeders within the European Community regarding the continuing exemption by the Republic of Ireland of bloodstock sales from value added tax.
A copy of the letter to which my hon. Friend refers has been placed in the Library. The VAT treatment of bloodstock is governed by the EC sixth directive on the harmonisation of VAT and the position in the United Kingdom conforms to the directive. Partly because of pressure from the United Kingdom Government, the EC Commission brought infraction proceedings before the European Court against France in respect of its system of charging VAT only on the carcase value of bloodstock. As a result, France is understood now to charge VAT on the full selling price, though at a reduced rate, which is permitted under the sixth directive. Ireland's exemption in respect of bloodstock is permitted under a temporary derogation from the directive. However, the EC Commission has recently published proposals for its abolition, along with other derogations, in the draft eighteenth directive on VAT. Customs and Excise is currently consulting bloodstock interests in order that the industry's views may be fully taken into account in EC discussions on the Commission's proposals, which would require the unanimous agreement of all member states before being adopted.