One of the more heartening exchanges in the Wikileaks files involves Alistair Darling, the then chancellor.
After a worthy discussion about bank bonuses and financial regulation, the US ambassador delicately turned to the most important issue of the day: tax breaks for US diplomats.
Ambassador raised the new embassy project at Nine Elms, noting that the $1.2 billion project would spur redevelopment of a blighted area and create jobs.
He said that as a matter of principle, the UK should not impose value-added tax on the construction of a chancery building.
Well, as you can imagine, this suggestion didn’t go down brilliantly with Darling.
Darling responded that the government could not exempt the project from VAT, citing the recession, tight budget and elections.
Ouch. But this won’t draw a line under the matter.
Much like the congestion charge, Ambassador noted that construction was projected to start in 2012 and urged the Chancellor to work with him to find a solution.
Solution? Given there has been a seven year stand-off over the US embassy’s £3,821,880 bill in unpaid congestion charge fines, I can’t see this VAT issue being resolved very soon.
UPDATE: Jim initially broke this story in the summer.
Jim Pickard
Kiran Stacey