NEW PACE-SETTING MOVES TO UPDATE AND MODERNISE TAX SYSTEM

A number of Government measures to keep indirect tax systems up to
date were announced today. The carefully targeted package comprises:

introduction of VAT exemption for investment gold;
introduction of VAT exemption for membership subscriptions to
non-profit making bodies with aims of a political, religious,
patriotic, philosophical and philanthropic nature;
clarification and updating of the penalty provisions for VAT zero
and reduced rate certificates;
clarification of the time limits for penalties for VAT EU sales
statements;
extension of excise duty repayments for ships' and aircraft stores;
standardisation of duty repayment arrangements for oils; and
introduction of late payment interest on customs duty debts.

DETAILS

VAT exemption for investment gold

Investors throughout the EU will be able to buy gold bars and wafers
and gold bullion coins exempt from VAT from 1 January 2000, in line
with a new Directive negotiated during last year's British Presidency
of the EU. Special provisions for transactions on the London bullion
market remain intact.

Exemption from VAT for membership subscriptions

Changes to the VAT treatment of membership subscriptions to
political, religious, patriotic, philosophical and philanthropic
bodies will enable many such bodies to reclaim VAT on the costs of
supplying publications to members. The one-off benefit to them is
estimated to be #10 million in 1999/2000.

Incorrect Certificates Penalty

The penalty for giving an incorrect certificate claiming the VAT zero
rate for a supply will be extended to incorrect certificates claiming
the reduced rate.

Penalties for VAT EU sales statements

Penalty assessments for failure to submit an EU sales statement or
for inaccuracies in EU sales statements will not be made more than
two years after the facts come to the attention of Customs.

Extended scope for excise duty repayments (drawback) for ships' and
aircraft stores

The way will be cleared for regulations allowing excise duty already
paid to be reclaimed on goods supplied for ships' and aircraft stores
(up to now restricted to beer and hydrocarbon oils). This will
especially help small businesses who do not hold duty suspended goods
in excise warehouses.

Standardisation of duty repayment arrangements for oils

The law relating to excise duty repayments (drawback) on hydrocarbon
oils will be simplified. It will also become fairer, by preventing
drawback claims on non-commercial exports of oil.

Customs Duty Debts

As part of Government modernisation of the tax system and in line
with their commitment to commercial restitution for late payment of
bills, late payment of customs duty debts by traders will attract
interest at a commercial rate. To ensure fairness the Government has
decided that interest may be claimed by traders where Customs &
Excise has exceeded a statutory time-limit for paying valid claims
for repayment of customs duty.

Interest charges will apply to customs duty and CAP levies not paid
by due dates. Interest will not apply to import VAT or excise
charges. The expected date of implementation is 1 April 2000.

NOTES FOR EDITORS

1. Details for businesses are in Budget Notices 1/99, 9/99, 11/99,
30/99, 32/99, 52/99 and 103/99. These are available from Customs and
Excise Business Advice Centres and from the Customs and Excise
Internet site.

Press enquiries only to HM Customs and Excise, Public Relations
Office, New King's Beam House, 22 Upper Ground, London, SE1 9PJ.
Telephone: 0171 865 5468/5471

Others should contact their local VAT Business Advice Centre, listed
under Customs and Excise in the telephone book.

Customs and Excise Internet address:
http://www.hmce.gov.uk/

This news release can also be found at:
http://www.hm-treasury.gov.uk/

Other Treasury material can also be found at this address.

# = pounds sterling