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Economic And Monetary Union

Volume 302: debated on Monday 1 December 1997

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To ask the Chancellor of the Exchequer (1) what proposals he has for allowing United Kingdom citizens to pay taxes in euros before 2002; [15923](2) if his proposals to allow taxes to be paid in euros before 2002 will allow such payments to be free of exchange costs. [16696]

To ask the Chancellor of the Exchequer (1) what will be the cost of equipping (a) the Inland Revenue and (b) Customs and Excise to collect tax payments in euros after 1999; [15966](2) what will be the operation date for calculation of the exchange rate in force for payments of taxes in euros after 1999; and which government department will bear the exchange rate risk of such transactions; [15965](3) what assessment he has made of the need for additional computing and information technology resources for

(a) the Inland Revenue and (b) Customs and Excise arising from their acceptance of payment in euros after 1999; [16179]

(4) what plans he has for the dissemination of information arrangements for tax payments in euros for 1999 to (a) professional tax advisers and (b) taxpayers. [16178]

The Inland Revenue and Customs and Excise are, like other organisations, reviewing their banking requirements and their systems to take account of the likely effects of the introduction of the Euro, including an increase in the demand for payment of taxes in foreign currencies. This review is being conducted in consultation with the Business Advisory Group established by the Chancellor to look at the practical and strategic implications of EMU which is, among other things, assessing legal, accounting and reporting issues arising from EMU and what information about EMU is needed by business. A report summarising the groups conclusions and recommendations will be published early in 1998. If the reviews lead to proposals to change the way the existing arrangements operate, the information will be disseminated promptly and in the appropriate way. Costs will be addressed once the full implications have been identified.Inland Revenue and Customs and Excise already accept payment of tax in foreign currency, so there is no new principle involved in accepting the Euro from 1999. It is not expected that accepting payment in Euro on the same basis will require substantial additional resources.Where tax payments to the Inland Revenue are made in foreign currency the net amount received conversion into sterling is the amount which the taxpayer is treated as having paid. So the exchange risk of a payment in euro will be borne by the taxpayer. Customs and Excise currently meet the costs arising from currency conversion on the relatively few payments received in foreign currencies. This policy may need to be reviewed if the introduction of the Euro increases demand.