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To ask His Majesty's Government, following the Upper Tribunal’s decision in The Commissioners for His Majesty’s Revenue and Customs v. Yorkshire Agricultural Society [[2025] UKUT 00004 (TTC)], when they plan to refund the value added tax paid by that society.
To ask His Majesty's Government, following the Upper Tribunal’s decision in The Commissioners for His Majesty’s Revenue and Customs v. Yorkshire Agricultural Society [[2025] UKUT 00004 (TTC)], when they plan to refund the value added tax paid by that society.
HM Revenue and Customs has not produced an estimate of the total VAT overpaid by agricultural societies in running agricultural shows and does not hold centrally collated data on this.
HMRC will consider any repayment claim in line with VAT including the fundraising exemption. Where a Claimant has submitted a valid claim and provided the evidence required, HMRC will makeany repayment due within its normal service standards.
To ask His Majesty's Government, further to the reply by Lord Livermore on 9 June (HL Deb 1225), what is their estimate of the total amount of value added tax overpaid by agricultural societies in the course of running agricultural shows.
To ask His Majesty's Government, further to the reply by Lord Livermore on 9 June (HL Deb 1225), what is their estimate of the total amount of value added tax overpaid by agricultural societies in the course of running agricultural shows.
HM Revenue and Customs has not made an estimate of the total amount of VAT overpaid by agricultural societies in running agricultural shows and does not hold centrally collated data on this.
Whether an overpayment has been made can only be determined on the facts of each individual claim submitted by a taxpayer.
Therefore, HMRC cannot make a wider estimation for the sector from the information available to them.
To ask His Majesty's Government what consideration they have given to amending the rate of VAT on accommodation in the context of the proposed overnight visitor levy.
To ask His Majesty's Government what consideration they have given to amending the rate of VAT on accommodation in the context of the proposed overnight visitor levy.
VAT is a broad-based tax on consumption, with a 20 per cent standard rate applying to most goods and services on the price paid. As such, if accommodation providers increase their prices in response to the levy, VAT will apply to the entirety of the higher price.
Local authorities wishing to introduce a visitor levy scheme have several flexibilities they can use, including the rate the levy is set at and discretion over which businesses are in scope.
VAT reliefs come at a cost to the Exchequer and have to represent value for money for taxpayers as a whole. The Government keeps all taxes under review and any decisions on tax policy are taken at the Autumn Budget.
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK and has introduced new permanently lower business rates multipliers for eligible retail, hospitality and leisure properties. These new multipliers are worth nearly £1 billion per year and benefit over 750,000 properties.
There is a lot there. I am confident that HMRC accepts the law and is following the law, but I am more than happy to look into the points that the noble Lord raises.
There is a lot there. I am confident that HMRC accepts the law and is following the law, but I am more than happy to look into the points that the noble Lord raises.
Does the Minister accept that there are some areas where the law has already told the HMRC that it ought not to be demanding VAT—for example, agricultural shows—and that it refuses to accept the law and keeps on standing in the way of spreading what it has had to do for the Great Yorkshire Show to other shows? It is also true that the HMRC has lost its case about plug-in electric cars and is
supposed to reduce the VAT to the same level as you pay at home. At the moment, it is penalising people who do not have a drive, and therefore people who do have a drive get their VAT very much lower. Why does he not intervene and make the HMRC accept the law?
To ask His Majesty’s Government what assessment they have made of the impact on further education colleges of their inability to recover VAT on expenditure; and what plans they have, if any, to address this disparity to create equality with other publicly funded education providers.
To ask His Majesty’s Government what assessment they have made of the impact on further education colleges of their inability to recover VAT on expenditure; and what plans they have, if any, to address this disparity to create equality with other publicly funded education providers.
My Lords, further education colleges are publicly funded and provide free education. No VAT is charged on these services, meaning colleges cannot recover VAT on their costs. Further education colleges are currently outside the scope of VAT refund schemes that allow some public bodies, such as schools maintained by local authorities, to recover their VAT. The Government are continuing to look into the VAT position of these colleges.
My Lords, further education colleges are publicly funded and provide free education. No VAT is charged on these services, meaning colleges cannot recover VAT on their costs. Further education colleges are currently outside the scope of VAT refund schemes that allow some public bodies, such as schools maintained by local authorities, to recover their VAT. The Government are continuing to look into the VAT position of these colleges.
My Lords, further education colleges are publicly funded and provide free education. No VAT is charged on these services, meaning colleges cannot recover VAT on their costs. Further education colleges are currently outside the scope of VAT refund schemes that allow some public bodies, such as schools maintained by local authorities, to recover their VAT. The Government are continuing to look into the VAT position of these colleges.
I am grateful to my noble friend for his question. As I have said, the Government are continuing to look into the VAT position of these colleges. Of course, admitting further education colleges to a VAT refund scheme would be a change in tax policy. As my noble friend knows, the Chancellor makes decisions on tax policy at fiscal events in the context of the overall public finances. I agree with my noble friend about the importance of FE colleges. That is why we are investing in FE colleges: £1.7 billion to support them to maintain their estates; £375 million to expand capacity for post-16 education; £590 million to support priorities such as recruitment and retention; and £295 million into 29 technical excellence colleges to support key sectors for growth including construction, engineering and manufacturing.
I am grateful to my noble friend for his question. As I have said, the Government are continuing to look into the VAT position of these colleges. Of course, admitting further education colleges to a VAT refund scheme would be a change in tax policy. As my noble friend knows, the Chancellor makes decisions on tax policy at fiscal events in the context of the overall public finances. I agree with my noble friend about the importance of FE colleges. That is why we are investing in FE colleges: £1.7 billion to support them to maintain their estates; £375 million to expand capacity for post-16 education; £590 million to support priorities such as recruitment and retention; and £295 million into 29 technical excellence colleges to support key sectors for growth including construction, engineering and manufacturing.
I thank my noble friend the Minister for that response. As he correctly identifies, since 2011, FE colleges, unlike councils, academies and almost all other public sector organisations, have been unable to reclaim VAT costs from the Government’s refund scheme. LSE research estimates this to be a loss to the sector of £200 million a year. This puts college students at a funding disadvantage compared to their peers in state-funded schools and reduces resources for courses in government priority areas such as construction, engineering, digital and health. Given that colleges deliver disproportionately to young people from more disadvantaged backgrounds, and in the context of the current national crisis of young people not in education, employment or training, will the Government commit to reviewing this funding inequity for the FE sector as part of their cross-departmental response to the Milburn review?
As I have already said, the Government are aware of this issue and we are looking into the VAT position of these colleges. As I have also said, we have significantly increased the amount of funding that is going to FE colleges to do the exact things that the noble Lord is asking for: £1.7 billion to support colleges to maintain their estates and £375 million to expand capacity for post-16 education, among other investments.
As I have already said, the Government are aware of this issue and we are looking into the VAT position of these colleges. As I have also said, we have significantly increased the amount of funding that is going to FE colleges to do the exact things that the noble Lord is asking for: £1.7 billion to support colleges to maintain their estates and £375 million to expand capacity for post-16 education, among other investments.
My Lords, I will return to colleges and the original Question from the noble Lord, Lord Forbes. I want to follow up on the issue that he raised about the amount of VAT that is collected from colleges—about £200 million, if I heard the noble Lord right. What assessment have the Government done of the opportunity cost in improved facilities, more equipment and staff training that could be delivered if colleges were able to get that £200 million in VAT refunded?
There is a great deal to be said in favour of what Alan Milburn sets out in his interim review. He has published his interim review, setting out the drivers of youth unemployment. Clearly, some of the issues that the noble Lord raises are important to that and a factor in the rise in economic inactivity among those with health conditions. Alan Milburn will set out his final report later in the year, at which point he will set out his policy recommendations. I look forward to him doing so.
There is a great deal to be said in favour of what Alan Milburn sets out in his interim review. He has published his interim review, setting out the drivers of youth unemployment. Clearly, some of the issues that the noble Lord raises are important to that and a factor in the rise in economic inactivity among those with health conditions. Alan Milburn will set out his final report later in the year, at which point he will set out his policy recommendations. I look forward to him doing so.
My Lords, although the funding gap has halved in the last 10 years, FE continues to play second fiddle to HE in many respects beyond this important VAT issue. Does the Minister agree with the Milburn review that colleges face a further disadvantage because of the way funding is provided on a lagged basis, which disincentivises them from taking on NEETs who are less likely to complete their studies and therefore bring funding to the institution than other types of students?
I agree with my noble friend’s overall point that we want greater levels of parity between FE colleges and other educational establishments. The Government are delivering those measures through our post-16 skills White Paper on developing the skilled workforce that our economy needs and on reaching the target of two-thirds of young people participating in higher-level learning. FE colleges are a vital part of that. One thing that I have not read out is that, in recognising rising student numbers, the Government are providing £87 million of exceptional in-year growth payments to colleges this year and are increasing funding by nearly £800 million next year.
I agree with my noble friend’s overall point that we want greater levels of parity between FE colleges and other educational establishments. The Government are delivering those measures through our post-16 skills White Paper on developing the skilled workforce that our economy needs and on reaching the target of two-thirds of young people participating in higher-level learning. FE colleges are a vital part of that. One thing that I have not read out is that, in recognising rising student numbers, the Government are providing £87 million of exceptional in-year growth payments to colleges this year and are increasing funding by nearly £800 million next year.
My Lords, picking up what the noble Lord, Lord Johnson, said, the FE college sector really is the poor man of the education system in this country. This follows years of neglect by previous Conservative Governments. My noble friend the Minister read out a number of different improvements in the resourcing of these colleges, but does he agree that there also needs to be greater parity of pay? Those who work in FE colleges are worse paid than those who teach sixth formers and much worse paid than those who teach in universities, despite neither of
those groups being particularly highly paid. Will he look into this, with the Department for Education, to see whether there can be some improvement in pay and in the training of leaders in FE colleges, so that we can have better skills training in order to support the economy and a better deal for those young people who do not want to follow an academic route and go to university?
Both of those points are swept up in the point that I have already made: the Government are continuing to look into the VAT position of these colleges.
Both of those points are swept up in the point that I have already made: the Government are continuing to look into the VAT position of these colleges.
My Lords, as noble Lords know, I am huge supporter of vocational education, so I welcome this Question. Does the Minister agree with the noble Lord, Lord Forbes, that it would cost the Exchequer £200 million to extend the scheme in the way proposed? More generally, do the Government consider that the criteria to reclaim VAT are fit for purpose?
I am grateful to my noble friend for her question. I hear what she says and reassure her that the Government are aware of this discrepancy and are actively looking into it.
I am grateful to my noble friend for her question. I hear what she says and reassure her that the Government are aware of this discrepancy and are actively looking into it.
My Lords, another funding disparity currently planned for the next academic year relates to funding for free meals for students from poorer backgrounds. I strongly welcome the expansion of eligibility for free meals, but, in my experience, teenagers who attend FE colleges are no less hungry than those who attend schools. Will my noble friend agree to look again at the funding uprating for free meals?
Yes, although overhauling the entire VAT system would be something of a long-term project.
Yes, although overhauling the entire VAT system would be something of a long-term project.
Why do the Government so often favour a model that takes a lot of tax off institutions, people and companies and then has to give some back by way of grant to help pay for it? Is that not just a double handling charge that we do not need?
As I have said, we are looking into the VAT position of these colleges. I am not in a position to put a timescale on that just now.
As I have said, we are looking into the VAT position of these colleges. I am not in a position to put a timescale on that just now.
My Lords, I endorse everything that the noble Baroness, Lady Blackstone, said about the disparity in pay between FE lecturers
and schoolteachers, and the iniquity of that. FE is simply not treated in the same way as other educational systems. The Minister keeps saying that the Government are looking into this. Can he put a timescale on that? Are they looking into it this year, next year or way in the future?
To ask His Majesty's Government what discussions have been held with the Northern Ireland Executive about differential VAT rates for areas of the UK which are in direct competition with hospitality businesses in another jurisdiction.
To ask His Majesty's Government what discussions have been held with the Northern Ireland Executive about differential VAT rates for areas of the UK which are in direct competition with hospitality businesses in another jurisdiction.
The UK’s standard VAT rate of 20 per cent is close to the OECD average of 19.3 per cent and is forecast to raise almost £190 billion in 2026/27.VAT is a broad-based tax on consumption, and the standard rate applies to most goods and services. VAT on services, including hospitality, does not fall within the scope of the Windsor Framework.
There are no current plans to introduce regionally differentiated VAT rates for hospitality, which would add complexity to the tax system.
The Government has announced the Great British Summer Savings scheme. This provides a temporary reduction in VAT from 20 per cent to 5 per cent from 25 June to 1 September 2026 on eligible children’s meals, family leisure tickets and admission to summer attractions across England, Wales, Scotland and Northern Ireland, providing targeted support for families and for hospitality and tourism businesses across the UK.
To ask His Majesty's Government what assessment they have made of the provisions of the Windsor Framework relating to VAT on the ability to reduce the rate of VAT for the hospitality sector in Northern Ireland.
To ask His Majesty's Government what assessment they have made of the provisions of the Windsor Framework relating to VAT on the ability to reduce the rate of VAT for the hospitality sector in Northern Ireland.
The UK’s standard VAT rate of 20 per cent is close to the OECD average of 19.3 per cent and is forecast to raise almost £190 billion in 2026/27.VAT is a broad-based tax on consumption, and the standard rate applies to most goods and services. VAT on services, including hospitality, does not fall within the scope of the Windsor Framework.
There are no current plans to introduce regionally differentiated VAT rates for hospitality, which would add complexity to the tax system.
The Government has announced the Great British Summer Savings scheme. This provides a temporary reduction in VAT from 20 per cent to 5 per cent from 25 June to 1 September 2026 on eligible children’s meals, family leisure tickets and admission to summer attractions across England, Wales, Scotland and Northern Ireland, providing targeted support for families and for hospitality and tourism businesses across the UK.
To ask His Majesty's Government what recent assessment has been made of the impact of the 20 per cent VAT rate on the competitiveness of the UK tourism and hospitality sectors.
To ask His Majesty's Government what recent assessment has been made of the impact of the 20 per cent VAT rate on the competitiveness of the UK tourism and hospitality sectors.
The UK’s standard VAT rate of 20 per cent is close to the OECD average of 19.3 per cent and is forecast to raise almost £190 billion in 2026/27.VAT is a broad-based tax on consumption, and the standard rate applies to most goods and services. VAT on services, including hospitality, does not fall within the scope of the Windsor Framework.
There are no current plans to introduce regionally differentiated VAT rates for hospitality, which would add complexity to the tax system.
The Government has announced the Great British Summer Savings scheme. This provides a temporary reduction in VAT from 20 per cent to 5 per cent from 25 June to 1 September 2026 on eligible children’s meals, family leisure tickets and admission to summer attractions across England, Wales, Scotland and Northern Ireland, providing targeted support for families and for hospitality and tourism businesses across the UK.
My Lords, the new VAT relief on business donations of goods to charity came into effect on 1 April this year and it is too soon yet to assess the impacts. We anticipate the relief will incentivise increased food donations to charities eligible for the relief, meaning increased donations reaching those in need. The CBI estimates that the relief will lead to an additional £72.5 million in total donations annually. We are monitoring any possible impacts on social supermarkets.
My Lords, the new VAT relief on business donations of goods to charity came into effect on 1 April this year and it is too soon yet to assess the impacts. We anticipate the relief will incentivise increased food donations to charities eligible for the relief, meaning increased donations reaching those in need. The CBI estimates that the relief will lead to an additional £72.5 million in total donations annually. We are monitoring any possible impacts on social supermarkets.
To ask His Majesty’s Government what assessment they have made of the impact of the VAT relief on business donations on goods to charities on food redistribution networks, including social supermarkets.
I am grateful to the noble Baroness for her question. The short answer is yes, of course. We are hopeful that this new relief will help boost the supply of essential items to charities, enabling them to reach the people and communities who need them most. The relief will also make it easier for businesses to give surplus stock a second life, supporting families and communities across the UK and strengthening the circular economy by reducing waste and landfill. I hope very much that what the noble Baroness says is not the case. I understand the disappointment of some at not being eligible for this relief. It was important to maintain the structure of existing charity tax reliefs. However, as she asks, we will continue to monitor any potential impacts and accept the evidence. She might like to know that HMT officials will shortly be meeting with the sector to discuss this further.
I am grateful to the noble Baroness for her question. The short answer is yes, of course. We are hopeful that this new relief will help boost the supply of essential items to charities, enabling them to reach the people and communities who need them most. The relief will also make it easier for businesses to give surplus stock a second life, supporting families and communities across the UK and strengthening the circular economy by reducing waste and landfill. I hope very much that what the noble Baroness says is not the case. I understand the disappointment of some at not being eligible for this relief. It was important to maintain the structure of existing charity tax reliefs. However, as she asks, we will continue to monitor any potential impacts and accept the evidence. She might like to know that HMT officials will shortly be meeting with the sector to discuss this further.
My Lords, while the intention of the policy is welcome, does the Minister recognise that it may create a perverse incentive for businesses to divert surplus food away from community organisations and enterprises such as Community Shop, which provide both affordable food and wider support for vulnerable groups? Will he accept any evidence that may come forward as a result of this policy that this perverse incentive is happening and then consider possibly tweaking the policy?
I very much agree with the noble Lord. I think we may have discussed this once before, and I agreed with him then as well. As I understand it, HMRC is absolutely cracking down on this type of behaviour.
I very much agree with the noble Lord. I think we may have discussed this once before, and I agreed with him then as well. As I understand it, HMRC is absolutely cracking down on this type of behaviour.
My Lords, what assessment have the Government made of VAT registration for high street businesses such as mini-markets, vape shops and the like? I recently bought a phone charger and was surprised not to see a VAT receipt, and that business—there are many businesses like this—had significant turnover, well above the VAT threshold. If they are not registered for and not paying VAT, and are not paying national insurance, the minimum wage and corporation tax, that cannot be fair to those legitimate business that do pay their taxes.