Value Added Tax (Place of Supply of Services) (Telecommunication Services) Order 2017

Anneliese Dodds Excerpts

Monday 23rd October 2017 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mr Hosie. I am grateful to the Minister for his explanation of the order, which clearly, as he set out, will bring the UK’s practice in this area in line with much international practice. I just have two brief questions.

First, the commencement date of the new rules—1 November—is obviously quickly approaching, so we are on a short timescale. I wonder whether the Minister is able to comment briefly on the extent of industry preparedness for this measure. That is particularly important given that the explanatory memorandum makes it clear that there may be some uncertainty about the nature of arrangements in this regard when we leave the EU. Therefore, compliance costs and issues are particularly pertinent. It would be helpful to hear whether he believes that the industry will be ready for these changes.

Secondly, the Minister talked about the likely impact of the measure on revenues accruing to the Exchequer. He mentioned apparent evidence of some telecommunications firms in effect exploiting uncertainty about where consumers are located to retain funds that should be paid in VAT. He provided three different figures. He suggested that there would be increases in revenue of £25 million in 2017-18 and of £65 million after that. I assume that £65 million is an annual figure and that the £25 million is just because the 2017-18 tax year has a short time left to run, but I wonder where the overall £1 billion figure comes from. Is that just an estimate over time? Will he provide a little more information about that?