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Written Question
Treasury: Reorganisation
Thursday 25th March 2021

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what plans they have to divide Her Majesty’s Treasury into (1) a department for economic and industrial policy, and (2) a ministry of finance; and if they have no such plans, whether they have any plans to change the structure of Her Majesty's Treasury.

Answered by Lord Agnew of Oulton

There are no plans to divide the Treasury. The only significant structural change planned, as announced at the Budget, is the establishment of an economic campus in Darlington. The campus is expected to include at least 750 roles from across the Treasury, the Department for International Trade, the Department for Business, Energy and Industrial Strategy, the Ministry of Housing, Communities and Local Government and the Office for National Statistics.


Written Question
Housing: VAT
Monday 15th February 2021

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact on carbon emissions of charging VAT on the repair and maintenance of residential properties; and what plans they have to ensure that the VAT treatment of (1) constructing new build, and (2) repairing and maintaining existing, residential property is aligned.

Answered by Lord Agnew of Oulton

The Government currently maintains a zero-rate of VAT on the construction of new build residential properties. This is to provide a lower burden of tax for purchasers of new homes. The supply of existing homes is exempt from VAT for the same reason. Renovation and conversion costs are also eligible for a reduced rate of VAT, providing conditions are met.

While all taxes are kept under review, the Government has no plans to review the VAT treatment of housebuilding and repair at this time.


Written Question
Directors: Coronavirus
Monday 15th February 2021

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government, further to the remarks by the Financial Secretary to the Treasury on 25 January that "I and my officials do not believe that [the directors income support scheme] as framed overcomes the fundamental issues of protecting taxpayers’ money and safeguarding it against fraud and abuse" (HC Deb, col 137), which aspects of the proposal for a directors income support scheme by the Federation of Small Businesses do not (1) protect taxpayers' money, and (2) safeguard against fraud and abuse.

Answered by Lord Agnew of Oulton

The Directors Income Support Scheme, as currently framed, is intrinsically reliant on self-certification. As the Government cannot readily verify this information, an effect of this reliance on self-certification is to open the scheme up to an unacceptable level of fraud by organised criminal groups and others who would seek to exploit these schemes. The Government cannot expose the tax system to these risks, but continues to engage with the FSB regarding these concerns.


Written Question
Duty Free Allowances
Wednesday 28th October 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of (1) the benefit to the UK economy of tax-free shopping being available to non-EU visitors, and (2) the impact of ending participation in (a) the VAT Retail Export Scheme, and (b) air-side tax free concessions, on (i) the number of tourist visits to the UK, (ii) the total shopping spend of tourists visiting the UK, and (iii) the viability of the UK retail sector.

Answered by Lord Agnew of Oulton

Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:

- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.

- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.

- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.

- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.

The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.

The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.

HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.

The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.

HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.

The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.

The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.


Written Question
Duty Free Allowances
Wednesday 28th October 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact of the ending of air-side tax free concessions on (1) jobs, and (2) public finances; and what action they plan to take to offset any such impact.

Answered by Lord Agnew of Oulton

Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:

- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.

- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.

- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.

- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.

The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.

The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.

HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.

The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.

HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.

The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.

The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.


Written Question
Exports: VAT
Wednesday 28th October 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact on (1) jobs, and (2) public finances, of the ending of participation in the VAT Retail Export Scheme; and what action they plan to take to offset any such impact.

Answered by Lord Agnew of Oulton

Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:

- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.

- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.

- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.

- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.

The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss with stakeholders following the announcement of these policies.

The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.

HMRC estimate that VAT RES refunds cost around £0.5 billion in VAT in 2019 for around 1.2 million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9 billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4 billion per annum.

The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.

HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.

The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.

The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.


Written Question
Coronavirus Job Retention Scheme
Tuesday 22nd September 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the survey results published by Make UK in its report Manufacturing Monitor, published on 7 September, and in particular the 62 per cent of respondents who thought the Coronavirus Job Retention Scheme should be extended for critical sectors; and what action they plan to take as a result.

Answered by Lord Agnew of Oulton

The Government is aware of the intense disruption businesses in the manufacturing sector have faced due to the pandemic and has sympathy with all those affected.

The Coronavirus Job Retention Scheme (CJRS) was designed to be in place only as a temporary measure while businesses regrouped and responded to the crisis. It would be challenging to extend the CJRS for specific sectors in a fair and deliverable way and it would also be difficult to do so without creating distortion, particularly as some firms work across multiple sectors.

The CJRS will remain open until the end of October, and other schemes in the Government’s unprecedented package of support for businesses remain open for those who need it.

The Government is continuing to collect evidence on the impact of the pandemic, including on specific sectors, and to work with businesses and representative groups. This will of course inform the Government’s efforts to support the recovery heading into the autumn.


Written Question
Retail Trade: Taxation
Tuesday 11th August 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government whether they will take into account the multi-channel nature of retail sales when (1) undertaking their fundamental review of business rates, and (2) considering the introduction of any form of online sales tax.

Answered by Lord Agnew of Oulton

On 21 July, HM Treasury published a Call for Evidence for the fundamental review of business rates. The Call for Evidence invites stakeholders to contribute their views on ideas for reform on all elements of the business rates system and on alternative taxes.

As set out in the Call for Evidence, the fundamental review will have an interim report in Autumn 2020, ahead of concluding in Spring 2021.

The Government will consider all relevant evidence submitted to the review.


Written Question
VAT: Tax Rates and Bands
Wednesday 22nd July 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government what plans they have to extend the VAT cut for the hospitality and tourism sector to high street retailers.

Answered by Lord Agnew of Oulton

In light of the COVID-19 outbreak, the Chancellor has introduced a range of measures to help individuals and businesses through the pandemic, including grants, loans and relief from business rates at a cost of more than £300 billion.

The temporary reduced rate of VAT will support the tourism and hospitality sectors and will help over 150,000 businesses and protect over 2.4 million jobs. There are currently no plans to expand the scope of the temporary VAT reduction to include high street retail businesses. However, the Government keeps all taxes under review.


Written Question
Non-domestic Rates
Wednesday 22nd July 2020

Asked by: Lord Allen of Kensington (Labour - Life peer)

Question to the HM Treasury:

To ask Her Majesty's Government when they expect to issue a call for evidence as part of the fundamental review of business rates, announced on 11 March; and when they anticipate that review to complete.

Answered by Lord Agnew of Oulton

On 21 July, HM Treasury published a Call for Evidence for the fundamental review of business rates. The Call for Evidence invites stakeholders to contribute their views on ideas for reform on all elements of the business rates system and on alternative taxes.

As set out in the Call for Evidence, the fundamental review will have an interim report in Autumn 2020, ahead of concluding in Spring 2021.

The Call for Evidence can be found on the gov.uk website.