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Olympic Games faces £1bn tax bill Olympic Games face huge tax bill
(43 minutes later)
Organisers of the 2012 London Olympic Games have discovered they may be facing a £1bn tax bill. Organisers of the 2012 London Olympic Games have discovered they may be facing a huge additional tax bill.
Tory Olympic spokesman Hugh Robertson said the government had assured him that the cost of construction sites would not be subject to VAT. Tory Olympic spokesman Hugh Robertson said the government had assured him that the £2.38bn cost of construction sites would not be subject to VAT.
But the Treasury said European regulations dictated it could not be seen to be supporting the organisers. But the Treasury is demanding the tax, and has said that European regulations state it cannot be seen to be supporting the organisers.
Mr Robertson said forcing the Olympic organisers to pay VAT at a rate of as much as 17.5% would be "catastrophic". It is in discussions with the Olympic Delivery Authority over the matter.
'Specific undertakings''Specific undertakings'
When the London bid was submitted to the International Olympic Committee in 2004 it included an estimate for building various sites in east London.When the London bid was submitted to the International Olympic Committee in 2004 it included an estimate for building various sites in east London.
It estimated the cost at £2.38bn, but that did not include VAT on construction work or other costs.It estimated the cost at £2.38bn, but that did not include VAT on construction work or other costs.
Mr Robertson said forcing the Olympic organisers to pay VAT at a rate of as much as 17.5% would be devastating.
Mr Robertson said: "The issue of VAT on the Olympic sites was raised by the Conservative Party during the passage of the London Olympics and Para-Olympics Bill, and we received specific undertakings from the government that the Treasury would waive these costs.Mr Robertson said: "The issue of VAT on the Olympic sites was raised by the Conservative Party during the passage of the London Olympics and Para-Olympics Bill, and we received specific undertakings from the government that the Treasury would waive these costs.
"It would be catastrophic if (Chancellor) Gordon Brown were to renege on that commitment now.""It would be catastrophic if (Chancellor) Gordon Brown were to renege on that commitment now."
The Department of Culture, Media and Sport is negotiating with the Treasury on a public sector funding package for the Games. A Treasury spokesperson said: "We are in discussion with the DCMS (Department of Culture, Media and Sport) and the Olympic Delivery Authority (ODA) issues and we are confident we can find a way forward.
It is due to be announced in the next few months. "But it would not be helpful to give a running commentary on those discussions."
Officials at the Olympic Delivery Authority declined to comment.