§ Mr. Austin Mitchell
asked the Chancellor of the Exchequer (1) what are the arrangements for the payment or refund of value added tax in the case of United Kingdom farmers; and how these compare with the arrangements in West Germany;
(2) whether the arrangements for reimbursement of value added tax to West German farmers agreed by the EEC Council of Ministers provides for the repayment to be restricted to the amount of input value added tax; and whether the same facility has been granted to United Kingdom farmers who supply farm products to the West German market.
§ Mr. Hayhoe
As I explained in my reply to the hon. Member on 30 November the special arrangements agreed for West German farmers are not concerned with rebate of VAT. The Council of Ministers decided that the VAT mechanism should be used to make payment of a special aid to farmers in the Federal Republic of Germany. Such payments of special aid are not available to United Kingdom farmers.
There are no special arrangements for United Kingdom farmers, but most of their outputs are zero-rated. Those registered for VAT bear no tax on their zero-rated outputs, and can recover the input tax they incur in accordance with the normal VAT rules.
In West Germany I understand that a special scheme is available to farmers which in broad terms involves payment of VAT at a special flat rate without recovery of input tax. Such a scheme is provided for under the sixth VAT directive agreed by the Council of Ministers in 1977.