Vol. 441 No. 7
65 Mr. Callely asked the Minister for Finance if he will review VAT charges on tools which are required by tradesmen such as mechanics, carpenters, draughtsmen, hairdressers and other such trade personnel who are charged 21 per cent VAT on necessary tools and have no way of recouping this; the plans, if any, he has to allow an annual allowance or special concession; and if he will make a statement on the matter.
The standard VAT rate, currently 21 per cent here, applies to trade tools generally under the terms of the EU Rates Directive, which governs the VAT treatment of goods and services in the Single Market. I have no scope under the Directive to apply a reduced rate to such items.
I should point out that tradesmen who are registerd for VAT purposes are able to recover in full the tax borne on the purchase of tools and other business inputs. At present, tradesmen in the services sector are obliged to register if their annual turnover exceeds £15,000, but they can opt to do so even if they do not exceed the registration threshold: as registered persons, they are then entitled to recover their input VAT, but they must, of course, also charge the tax on the supplies they make. There is no provision under EU law which would permit me to introduce measures to allow unregistered tradesmen to recover VAT charged on their business inputs: such a course of action would clearly contravene the EU VAT requirements.
