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US refuses to pay £50m VAT for new embassy
Ross Lydall28 Aug 2009
The American government is refusing to pay a £50 million tax bill on the construction of its proposed new embassy in London.
It is fighting Treasury demands that it pays VAT on the construction of a £275 million building known as The Iceberg, which it hopes to open in Nine Elms, Battersea, by 2016.
The Americans are being supported by Wandsworth council's Tory leader Edward Lister, who has asked Chancellor Alistair Darling to grant an exemption. Mr Lister said that “substantial” economic benefits and future tax revenues risked being lost to London if the Treasury's “rigid attitude” was not reversed.
The US wants to move its embassy from Grosvenor Square, Mayfair, to increase security. The new building, to be built near New Covent Garden Market, would be protected by a 30-metre “blast zone”.
In the past eight years the US has escaped paying tax on 68 diplomatic properties it has built around the world. The US government has also refused to pay the congestion charge since its introduction in 2003, claiming diplomatic immunity from taxes. At the start of last month it had 30,979 unpaid tickets, running up a debt with Transport for London of almost £3.6 million.
One Whitehall source told the Financial Times that the battle to avoid VAT on the new embassy had reached high levels in the US government. “This is very important to the US, it has been raised at the highest levels in Washington — although not quite Obama.”
One solution has been suggested of allowing the UK a similar tax exemption on British building projects in Washington.
The Foreign Office said there was no strict rule on whether the UK paid a sales tax such as VAT on its overseas contracts. “It depends on local circumstances — sometimes we do, sometimes we don't,” a spokesman said.
Reader views (22)
Don't be fooled by these inane smokescreens of 'adversity'. I, for one, believe the US & Britain are very much aligned in desires & motives. This is simply one more item to waste your attentions on while the real theft occurs under both our country's noses & against both people's.
- Gabriel, LA, CA USA, 20/10/2009 19:33
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Here where I live in New York, no consulte/mission pays taxes on anything including sales tax, almost but not quite equivalent to VAT, ever. Diplomatic missions, including that of the UK, don't pay parking fines leaving our city out hundreds of millions of dollars. Just recently, the Secretary of State reversed a policy and has allowed all residences used by diplomatic staff to be tax free. We all lose tax money not just other countries. Stop whinging.
- Charles, New York USA, 20/10/2009 18:33
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Don't forget this is an 'ex-colony' and as such we would have had an agreement that these colonials pay all due tax's as part of the agreement, this will of course not be limited by future date !
I am somewhat surprised about the Wandsworth position as their ratepayers will be covering the lack rates paid for this monstrosity each year.
Personally I think the US should 'butt out of UK politics, have only a very small building as a presence and generally keep its nose will out of our internal affairs eg Lockerbie', just as they would expect us to in their junta
- Jerry, London, England, 20/10/2009 18:33
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Let's find out exactly what US taxes our Embassy in Washington pays or does not pay. It cannot be rocket science to come to an arrangement in which reciprocity is the guiding principle.
- John C, Leatherhead, UK, 20/10/2009 18:33
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We should just close the existing embassy and kick them out of the UK until they pay the £3.6 million they already owe.
- Jj, London, 20/10/2009 18:33
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Is the UK exempt from any similar tax in the USA, if not then the US should NOT be exempt in the UK. . . ."SIMPLES"
- Richard, Thame Oxfordshire, 20/10/2009 18:33
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They should pay the tax like everybody else in london,why should they have any excemption,give it to them then everybody will be demanding it,thereby making london even more bankrupt than it is already. Do not let the americans bully their way through this, it is so typical of them,yet when others are in the usa they have to abide by all the rules,talk about "do as l say not as l do".
- Meg,Former Essex Girl, merthyr,south wales, 20/10/2009 18:33
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why is Wandsworth council supporting this? I hate having to give the govt any money but its morally justified to do so, the wealthiest nation on the planet should not be exempt from this when we pretty much ALWAYS have to pay!
What possible economic benefits are there to local residents of the embassy moving? None! There might be a few new jobs but they will be open to all Londoners and Americans not just Wandsworth residents, MAKE THEM PAY that AND the congestion charge which legally is not 'tax' anyway!
- Alan, London, 20/10/2009 18:33
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Precisely what benefit does letting them off £50m of VAT have on the British economy? Wherever they are in the UK their staff will be spending money. Already they owe millions in congestion charge.
- Andy, London, 20/10/2009 18:33
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This is yet another example of American superiority and arrogance. It is little wonder that this country is so disliked by so many people in the world. It is time that they started playing by the same rules that the international community plays by and if they don't want to, then the international community should start to shun them. This is total arrogance and totally offensive. It is also no way to treat an ally. The UK should start being much firmer with the US. I was once a big fan of the US. After 10 years of arrogance from successive US administrations, I am no longer a fan. I am not even sure that I like the US as a country; although I am a fan of many of its people.
- Anthony, London, 20/10/2009 18:33
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Does anyone here actually believe that the USA giving 50m to the treasury will benefit the people of the UK? this is the same "treasury " that's spent literally billions on propping up Northern Rock and other useless trash. Perhaps if the USA built an extension to St Georges hospital or something concrete that actually helped a wide range of people rather a narrow band of "mates of Labour" I would support the idea.
- John Graham, london UK, 20/10/2009 18:33
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Arrogant, bullying third world nation with no values. tell them they can have a 2 bedroom flat on the Stockwell park estate as their embassy.
Who needs 'em
- Kerry, Purley, 20/10/2009 18:33
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We should treat their embassy here in the same way our embassy there is treated, if we pay tax then so should they, if they don’t then why should we? It sounds very much as though we're paying them tax and to use a quaint American colloquialism they're "flipping us the bird" in response.
- Bob, Cheam, 20/10/2009 18:33
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Great news about the move. But they should pay up, others do. Should raise the tone of Battersea, and leave Central London free of demonstrators. Ken couldn't get them to paying their parking tickets.
- Dhan Raj, Basildon, 20/10/2009 18:33
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You all sit and spout about the US not paying but do you have any idea the fines and costs that US incurs from foreign embassies in Washington, DC and New York?!? They're all covered by US taxpayers - motorcades, parking fines from embassy cars that double park and block streets, extra police for your dignitaries..all of these expenses the UK and other countries don't pay for. US American citizens incur these financial burdens - but you all seem to forget that.
- Ks, London, UK, 20/10/2009 18:33
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The Americans, [North], are becoming a little bit irritating of late.
- Mark H, London, England, 20/10/2009 18:33
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Charles in NYC, "when in Rome, do as the Romans do". In Britain, foreign embassies pay taxes. If the USA doesn't want to pay up, it should up sticks and leave, either by free will or force.
This whole mess needs to be sorted out before any permission is given to start digging the foundations of Fort Battersea. That includes the congestion charges and the cost incurred by the police in protecting the current US Embassy from the consequences of its government's foreign policy arrogance.
- Austen, London, 20/10/2009 18:33
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THIS EMBASSY SHOULD NEVER BE BUILT IN VAUXHALL !!!
- Chrys, LONDON, 20/10/2009 18:33
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ood for the US. They don't pay UK tax so stop whining.
It will bring a new look to Vauxhall but the dimwits writing here cannot see that.
- Minnie Ovens, London, UK, 20/10/2009 18:33
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I think this is called the "special relationship".
- Mick, London, England, 20/10/2009 18:33
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The US has no VAT, no congestion tax. Illegal parking and trafic violations go unpaid under diplomatic immunity. You Brits need to lighten up.
- Jj, Austin, Texas, 20/10/2009 18:33
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Well of course the US doesn't have to pay taxes in other countries, but the other countries have to pay taxes in the US. It's called 'tribute'. The Delian League paid Athens, the English paid the Vikings, our era's suzerain is the US.
- Threaded, Roskilde, Denmark, 20/10/2009 18:33
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