EU plan could call UK VAT exemptions into question

Pierre Moscovici warns 'zero rate is not the best idea' but Britain would have veto on any proposal to do away with exemptions

The European Union executive is planning a review of value added tax across the bloc that might call into question Britain's right to waive the sales duty on food, medicines and children's clothing.

The comment by Pierre Moscovici, the economics commissioner, could cause controversy as David Cameron prepares to call a referendum on Britain's continued EU membership.