Warning Over Independence VAT Rises

Children's clothing, books, equipment for the disabled and even the cost of refitting naval vessels could be more expensive if an independent Scotland loses the UK's opt-out of Europe's standard VAT rate, according to the Conservatives.

Mothers could end up "crossing the border to buy clothes and shoes for their children'', the Tories have warned.

New EU member states must apply a minimum VAT rate of 15% with limited opt-outs, European Commissioner for Enlargement Stefan Fule has confirmed in response to a query by Tory MEP Struan Stevenson.

The UK has a longstanding opt-out on VAT for items such as children's clothing, books, disability equipment and construction work on naval vessels.

Experts are divided over whether Scotland would have to apply to the EU as a new state, or would continue with the UK's existing rights and opt-outs.

If Scotland follows the normal accession route it must apply the standard minimum 15% VAT rate with just "one or two reduced VAT rates set no lower than 5% for a certain limited list of supplies'', Mr Fule's response suggests.

The change would add £7 to the cost of bicycle helmet, £5 to a Scotland football top and £3 to a copy of the Guiness Book of Records, according to the Conservatives.

VAT expert Nicholas Hallam, CEO of Accordance, said it is "extremely probable'' that independence would result in Scotland having "considerably higher VAT charges than its English neighbour''.

"For Alex Salmond, this raises the terrifying spectre of Scottish mothers crossing the border to buy clothes and shoes for their children,'' he said in a statement issued by the Tories.

Scottish Conservative leader Ruth Davidson said: "Alex Salmond asserts that an independent Scotland could walk into Europe and automatically gain the same hard-fought opt-outs that the UK has secured through years of negotiations. All the experts say that it simply isn't true.

"The SNP needs to be upfront about this issue by informing voters that becoming independent would result in people losing out on substantial savings on numerous everyday goods.''

Mr Stevenson said: "As part of the UK, Scotland enjoys the best of both worlds with a 100% guarantee that we can avoid this tax.

"The UK negotiated hard to win this opt-out and we want to keep it.

"HMRC list 54 different items that currently enjoy zero-rates of VAT in the UK, ranging from children's clothes to books and newspapers, and even large swathes of the construction sector like shipbuilding. Why put such a substantial benefit at risk?''

Mr Fule said: "A new member state's VAT rates have to comply upon joining the EU with the EU legislation which currently lays down the obligation of applying a standard VAT rate (currently of at least 15%), and the option to apply one or two reduced VAT rates set no lower than 5% for a certain limited list of supplies.''

Liberal Democrat leader Willie Rennie said: "This shows the real benefits of the things we often take for granted as part of the UK in the EU.

"Our special terms of membership saves families hundreds of pounds in VAT each year on everything from children's clothes to defence equipment.

"As the EC Commissioner in charge of these important VAT rules makes clear, the SNP's independence plans would put all of this up for renegotiation.

"I want Scotland to remain in Britain and in Europe so that we can keep these positive exemptions and focus on boosting jobs and growth further.''

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