Scottish independence means VAT rise - EU chief

Children’s clothing, books, equipment for the disabled and even the cost of refitting naval vessels could face a price increase after independence, a European Union chief has indicated.

The UK has a long-standing opt-out on VAT for items such as childrens clothing and disability equipment. Picture: Getty

Scotland faces losing the UK’s opt-out on VAT rates because new EU members must apply a 15 per cent minimum, European commissioner for enlargement Stefan Fule has said.

However, the claim has been rejected as a “silly scare story” by Nationalists. They say Scotland will be negotiating its EU membership from inside and will not have to rejoin as a new member, making the VAT claims “irrelevant”.

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Losing the opt-out on VAT rates would add £7 to the cost of bicycle helmet, £5 to a football top and £3 to a copy of the Guinness World Records, according to the Conservatives. Mr Fule’s response came in a reply to a European parliamentary question from outgoing Conservative MEP Struan Stevenson.

The commissioner said Scotland, if it joins through the normal accession route, would have to apply the standard minimum 15 per cent VAT rate with just “one or two reduced VAT rates set no lower than 5 per cent for a certain limited list of supplies”.

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

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.” She

called for the SNP to be “upfront” about the issue and let voters know that “becoming independent would result in people losing out on substantial savings on numerous everyday goods”.

Nicholas Hallam, chief executive of Brighton-based Accordance, a VAT consultancy, 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 spectre of Scottish mothers crossing the Border to buy clothes and shoes for their children,” he said in a statement issued by the Tories.

HM Revenue & Customs lists 54 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 such as shipbuilding.

Mr Stevenson said: “As part of the UK, Scotland enjoys the best of both worlds with a 100 per cent guarantee that we can avoid this tax. The UK negotiated hard to win this opt-out and we want to keep it. Why put such a substantial benefit at risk?”

Mr Fule’s response to Mr Stevenson was released by the Conservatives yesterday.

It states: “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%).”

However, SNP European Parliament candidate Tasmina Ahmed-Sheik said: “Scotland has been part of the EU for over 40 years and will negotiate our own voice in Europe from within – so these remarks dealing with accession states are completely irrelevant.

“Struan Stevenson may be about to stand down, but it seems not without subjecting Scotland to one more silly scare story. The No campaign is clearly incapable of learning from just how quickly Project Fear’s previous scares have all collapsed.”

She compared the latest warnings with others from the No campaign that Scotland would face mobile roaming charges, driving on the right hand side of the road, losing the pandas at Edinburgh Zoo “or risk attacks from outer space”.

“The No campaign has time and again been left looking utterly foolish,” she added.