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Treasury
HM Revenue and Customs (Departmental Expenditure Limits)
The Financial Secretary to the Treasury (Mr. Stephen Timms): Subject to parliamentary approval of any necessary supplementary estimate, the HM Revenue and Customs total DEL will be increased by £91,338,000 from £4,448,459,000 to £4,539,797,000. Within the total DEL change, the impact on resources and capital are as set out in the following table:
The change in the resource element of DEL arises from:
modernisation fund drawdown of £62,500,000 administration near cash costs to modernise and transform HMRC;
near-cash administration costs draw down of non-voted DUP of £43,662,000 taken up as voted provision to facilitate improvements to key operational activities;
£1,520,000 administration near cash costs transferred from Cabinet Office in respect of Parliamentary Counsel Office;
£77,000 administration near cash costs to the Home Office in respect of transfer of five information officers;
£45,000 administration near cash costs transferred to HM Treasury in relation to the contribution towards the Centre of Expertise in Sustainable Procurement;
£40,000 near cash programme costs transferred to Cabinet Office for Government Secure Zone;
£21,000 administration near cash costs in relation to one post being transferred to HM Treasury; and
£1,000 increase in respect of VOA administration.
The change in the administration budget arises from the changes detailed in the resource element above excluding the £40,000 programme transfer to the Cabinet Office.
The change in the capital element of DEL arises from:
£27,500,000 capital draw down of modernisation fund.
National Savings and Investments (Departmental Expenditure Limit)
The Economic Secretary to the Treasury (Ian Pearson): Subject to parliamentary approval of any necessary supplementary estimate, National Savings and Investments DEL will be increased by £152,000 to £166,299,000 and the capital element of DEL will be increased by £950,000. Within DEL change, the impact on resources and capital are set out in the following table:
The change in the capital element of the DEL arises from modernisation fund being drawn down of £950,000 to support running costs on capital expenditure on their estate.
The change in the resource element of DEL arises from:
A drawdown of £152,000 from the modernisation fund to support additional running costs associated with capital spending.
The change in the administration budget arises from the modernisation fund draw down.
Value Added Tax
The Financial Secretary to the Treasury (Mr. Stephen Timms): The Chancellor of the Exchequer yesterday announced as part of the pre-Budget report a temporary reduction in the standard rate of VAT to 15 per cent. from 1 December 2008 to 1 January 2010 when the rate will return to 17 Â1/2 per cent.
This Government have taken these steps to provide further support for growth and incomes during the economic downturn. The Government’s discretionary fiscal action will deliver support of around 1 per cent. of GDP to the economy in total in 2009-10.
However, it is also important that the Government protect the public finances from artificial avoidance seeking to exploit the change in VAT rates where there is no current economic activity. Therefore, Finance Bill 2009 will contain anti-forestalling legislation to ensure that the VAT rate changes announced are fully effective. The Government will expose the draft legislation for comment as soon as possible.
Anti-forestalling legislation will apply from today to ensure that, in the circumstances set out below, supplies with a basic time of supply after a VAT rate increase takes effect will be subject to the rate of VAT in force at that time. The provisions are designed to prevent artificial forestalling while being straightforward for business to understand and operate and not affecting genuine commercial transactions. This legislation is not intended to catch the normal commercial activity of providing goods and services.
The anti-forestalling legislation will apply in the circumstances set out below where the supplier receives a prepayment for the goods or services or issues a VAT invoice in advance of the rate increase. It will also apply where, in advance of the rate increase, the supplier grants the customer an option or a right to obtain goods or services at a discount or free of charge after the rate increase takes effect.
The circumstances are that the customer cannot recover VAT in full on the supply and that:
the supplier and customer are connected parties; or
the supplier receives a prepayment, or grants the customer an option or a right, and the prepayment, or the acquisition of the option or right, is wholly or partly funded (directly or indirectly) by the supplier; or
a VAT invoice is issued by the supplier showing an amount any part of which is due more than six months after the date of the invoice.
The basic time of supply is normally when goods are delivered or made available, or when services are performed. For continuous supplies of goods or services, with consideration payable periodically or from time to time, the basic time of supply will be the end of the period to which a payment or invoice relates (that is, a billing period).
Although the anti-forestalling legislation will apply from today, any extra VAT arising from its operation will not become due until after Royal Assent of Finance Bill 2009. Until then, suppliers should continue to account for VAT as normal, applying the VAT rate at the time of the prepayment, VAT invoice issue or grant of the right or option.
The operation of the legislation will be kept under review to ensure that the provisions work as intended. Any additional or alternative anti-forestalling provisions included in Finance Bill 2009 will only take effect at the earliest from the date that they are announced.
Departmental Expenditure Limit (2008-09)
The Exchequer Secretary to the Treasury (Angela Eagle): Subject to parliamentary approval of the winter supplementary estimate, HM Treasury’s DEL will be increased by £1,318,000 from £220,233,000 to £221,551,000 and the Administration Budget will be increased by £1,223,000 from £168,202,000 to £169,425,000 with no change to the capital DEL. The impact on resources and the administration budget is set out in the following table:
| Change | New DEL | ||||
| Voted | Non-voted | Voted | Non-voted | Total | |
| (1)The total of 'Administration budget' and 'Near cash in Resource DEL' figures may well be greater than total Resource DEL, due to definitions overlapping. (2)Capital DEL includes items treated as resource in Estimates and accounts but which are treated as Capital DEL in budgets. (3)Depreciation, which forms part of Resource DEL, is excluded from the total DEL since Capital DEL includes capital spending and to include depreciation of those assets would lead to double counting. | |||||
The net increase in resource DEL of £1,318,000 is the net effect of the following:
A Machinery of Government transfer to the Cabinet Office of £273,000 near cash administration costs following the transfer of responsibility for the Statistical Reform team;
A transfer to the Statistics Board of £100,000 near cash programme costs as a contribution towards the costs of a project to improve the quality of migration statistics;
A contribution to the Cabinet Office of £80,000 near cash programme costs in respect of the Government Secure Zone costs;
A transfer from the Cabinet Office of £250,000 near cash administration costs towards consultancy costs incurred by the Prime Minister's Delivery Unit; and
A transfer from HM Revenue & Customs of £21,000 towards the costs of a post in the Budget, Tax and Welfare team.
Transfers to the Office of Government Commerce towards the costs of the Centre of Expertise in Sustainable Procurement as follows:
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