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VAT: Financial Services

Volume 485: debated on Thursday 11 December 2008

To ask the Chancellor of the Exchequer pursuant to the Answer of December 2008, Official Report, column 15W, on VAT: financial services, (1) what estimate he has made of the financial benefit the financial services sector will derive from the reduction in the standard rate of VAT; (242667)

(2) how much the financial services sector contributed to the Exchequer in (a) recoverable and (b) irrecoverable VAT in the last year for which figures are available.

Information on VAT receipts collected by trade sectors is published in the VAT Factsheet, available from:

In total the financial services sector (financial intermediation, insurance, pension fund and auxiliary activities) collected around £1 billion in net VAT receipts in 2005, the last year for which figures are published. This figure relates to all business activities of the relevant VAT registrations and not just their finance related activities, and does not include import VAT paid by these registrations.

HM Revenue and Customs does not collect data on irrecoverable VAT. The sector’s irrecoverable VAT and robust estimates of the financial benefit from the reduction in the standard rate of VAT are therefore not available.