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Last Updated: Tuesday, 7 November 2006, 12:01 GMT
Brown downplays Olympic VAT bill
Gordon Brown
Mr Brown said the Olympic VAT bill was not an issue
The government is "committed to making the 2012 Olympics work" even though the organisers face an unexpected VAT bill, Chancellor Gordon Brown has said.

EU rules mean VAT is due on the 2.4bn building costs as the Treasury cannot be seen to support the organisers.

But Mr Brown said there was "not an issue about the overall bill" for tax payers as "it is money transferred from the Exchequer or to the Exchequer".

The Tories accused the government of "frightening incompetence".

'London legacy'

Mr Brown said costs, such as the increased need for policing the Olympics following last year's terrorist attacks on London, had risen.

He told BBC Radio 4's Today programme: "But it is our job as a government, having made a commitment to have the Olympics in London, to make sure that the buildings are done in time and to do it to the best of our ability."

The Olympics would "also have a legacy that will regenerate that part of London and be of benefit to the whole United Kingdom".

The Treasury is in discussions with the Olympic Delivery Authority over the VAT bill.

When the London bid was submitted to the International Olympic Committee in 2004, it included an estimate for building various sites in east London, but had presumed VAT would not have to be paid.

Mr Brown said: "When we did the original application, there was one form of company organisation that might not have required VAT.

"Now that we have looked at the thing in detail, there may be another form of company organisation for the Olympic deal."

Conservative Olympic spokesman Hugh Robertson has called for VAT to be waived on the Olympics project.

He said: "The chancellor's astonishing admission this morning that the government had got the corporate structure of the ODA wrong is a sign of frightening incompetence at the heart of government."

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