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Foreign Companies: VAT

Volume 460: debated on Thursday 24 May 2007

To ask the Chancellor of the Exchequer what estimate he has made of the amount of money not paid each year to the Exchequer through the use by UK-based companies of overseas operations where value-added tax is not paid. (139176)

To ask the Chancellor of the Exchequer if he will take steps to require UK-based companies to pay value-added tax for transactions undertaken using locations outside the European Union; and if he will make a statement. (139177)

The Government have monitored closely exploitation of the relief by companies making VAT-free supplies from outside the EU, particularly from the Channel Islands. It notes the action already taken by the authorities there to counter such exploitation. In particular we welcome the commitment made by Jersey authorities, in decisions with the Government, to limit the activities of companies continuing to operate on the island, with the associated revenue loss to the Exchequer. The Government remain in discussion with the Guernsey authorities on this issue. It hopes that they will shortly be in a position to make a similar commitment. The Government will continue to keep the situation under close review.