EU regulations mean that VAT is due on the £2.4bn building costs for the Games because the government cannot be seen to support the organisers. At the time of the bid it included an estimate for building costs, but did not include VAT.
The government has now informed organisers that as a result of the omission, they will have to pay back an additional £1bn. The government is in talks with the Olympic Delivery Authority over the bill.
Chancellor Gordon Brown said, “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."
