Government inundated with £40bn VAT relief requests

VAT relief requests to ministers have totalled more than £40 billion since voters backed leaving the EU, MPs have heard.

Treasury Minister Robert Jenrick said the Government has been inundated with bids which seek to make use of the potential extra flexibility to vary VAT rules after Brexit. But Mr Jenrick warned there would be a need to be ‘realistic’ about what could be done given the need to fund public services.

His remarks came as MPs debated the Value Added Tax Bill, which proposed VAT changes including exemptions for women’s sanitary products, repairs and improvements to historic buildings and domestic fuel or power.

Tory former minister Sir Christopher Chope, who tabled the Bill, railed against restrictions in EU law and said the Treasury’s ‘mindset’ appears to be ‘far too negative and unimaginative’ on a lot of issues.

He later withdrew the Bill amid Government and Labour opposition.

Speaking in the Commons, Mr Jenrick said: “It is worth saying that since the referendum to leave the European Union, the Government has received in excess of £40 billion of requests for reliefs from VAT using the additional flexibilities we may have when we leave the European Union.

“Numerous other requests have been made to us, whether it be excise duties or air passenger duty, and in aggregate these produce a very substantial cost to the exchequer.”