asked the Minister for Finance if he is aware of the extra costs and difficulties caused to hoteliers and leisure centre proprietors by differing rates of VAT (details supplied); and if he will review the matter with a view to introducing a simple and more equitable VAT rate for the industry.
Written Answers. - VAT Rates.
546.
I am aware that the present number of VAT rates creates significant administrative costs and difficulties for traders generally including hoteliers and leisure centre proprietors. I indicated in my Budget Statement that I would be looking at the possibility of a fundamental reorganisation of the VAT structure. The necessary preparatory work in this connection is now being done and account is being taken of the administrative costs associated with the present system and the arguments advanced for a lower VAT rate for the hotel industry. I expect to have the benefit of the recommendations of the Commission on Taxation in carrying out this review.
547.
asked the Minister for Finance the reason a trader (details supplied) in Dublin 13 who pays £120,000 plus VAT to a managing agent for security cannot reclaim this VAT.
Security services are liable to VAT at the rate of 23 per cent and taxable persons acquiring these services for business purposes are normally entitled to a credit for the tax borne in the cost of the services.
I am advised by the Revenue Commissioners that, in the case in question and in the case of most shopping centres and similar property developments, security and other costs, such as the cleaning and lighting of public areas and insurance, are borne in the first instance by the landlord and reimbursed to him by the tenants under a covenant in the lease. However, once the initial lettings of developed property have been completed most landlords are no longer taxable persons under the VAT system. They do not continue to be registered for the tax and cannot, therefore, claim a credit for the tax borne on the services in question. Neither can the tenants of the property claim a credit because although the cost might rightly be regarded as having in effect been ultimately borne jointly by them as an addition to their rents, the various services are not supplied to them.
The problem is under examination and has been the subject of a number of meetings between the Revenue Commissioners and representatives of landlords of commercial property.