Government petition response ignores VAT reduction call

The Government has issued a disappointing response to the Repairing Britain petition on the Downing Street website.
The petition, posted by ROK, the property repair and maintenance contractor group, says: “in the current economic climate, individuals and businesses will need to invest in repairing and maintaining their existing properties, particularly as far fewer new properties are likely to be developed. However, whilst building new properties is exempt from VAT, the standard rate of VAT is payable on building repair and maintenance.”

The petition called for a reduction of VAT to 5% as this would “not only assist individuals and businesses with maintaining and improving their existing properties but, by increasing the amount of building and maintenance repair work undertaken, would also keep the nation’s highly skilled employees in work”.

However, the Government response says: “VAT is a broad-based tax on consumer expenditure and reliefs from it have always been strictly limited. When the UK joined the European Community in 1973 it meant signing up to the general agreements which govern the application of VAT throughout the EC.

“European VAT agreements allow EU Member States the option of applying a reduced rate of VAT of not less than 5 per cent on a prescribed list of goods and services set out in Annex III of the principal VAT Directive (2006/112/EC), including the “provision, construction, renovation and alteration of housing, as part of a social policy” and the “renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied.

“The UK currently applies a reduced VAT rate to certain residential conversions and to residential renovations and alterations, allowed for under EU law, but other works are standard-rated.

“The Government keeps all taxes under review and has noted the contents of this petition.”