No VAT is charged for the buying of an adapted vehicle by or on behalf of a disabled wheelchair user. Unfortunately, this scheme, which supports disabled wheelchair users to live independently, has been fraudulently abused by unscrupulous individuals who make purchases under this relief and then sell the vehicles on for additional profit. For example, HMRC discovered that one person purchased 30 BMWs under the scheme in one day, while another individual bought 100 vehicles that I would describe as high-performance sports cars and the like in under two years. This is clear abuse of the scheme, and its integrity is being brought into question by such behaviour.
Clause 57 will tackle abuse of the relief, while ensuring that it remains available for those with disabilities. The changes made by clause 57 will restrict the number of vehicles that an individual, or someone on behalf of that individual, may purchase under the scheme to one every three years. That will stop fraudsters from purchasing multiple vehicles in one day, or over a prolonged period. The legislation recognises that, in some circumstances, a replacement vehicle may genuinely need to be purchased within the three-year period. In addition, the clause makes it mandatory for vehicle dealers to submit a declaration of eligibility for each car purchased under the scheme to HMRC and applies penalties to those found to abuse the scheme.
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We expect that these changes will continue to support those whom it is intended to support, at a cost of about £40 million a year, while reducing fraud and saving up to £80 million of taxpayers’ money over the next five years. The Chancellor announced these changes at the autumn statement, and they were welcomed by key stakeholders. Disabled Motoring UK stated:
“Disabled Motoring UK is supporting the efforts of the Government to safeguard the scheme and make sure it is only accessed by eligible disabled motorists.”
The significant fraudulent abuse of the current scheme means that it must be changed. It is our intention to tackle this fraud, but continue to offer the financial support to disabled wheelchair users to lead independent lives. I therefore move that clause 57 stand part of the Bill.
Let me turn now to new clause 2, which was tabled by the hon. Member for Aberdeen North (Kirsty Blackman). We return to a subject that has had the odd outing in this Chamber before—I am talking about the issue of VAT on the Scottish Fire and Rescue Service. The new clause requests that the Treasury commissions a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service, reporting the cost of VAT to them at present and how this would change if they were eligible for refunds.
Let me recap some of the comments that have already been made from this Dispatch Box. To receive section 33 VAT refunds, a body must receive funding through local taxation and perform a function of a local authority. In 2012, the Scottish Government restructured their regional police and fire services into two national bodies, Police Scotland and the Scottish Fire and Rescue Service. Both are funded centrally, rather than through local taxation, and therefore do not—