The Treasury is pressing for the US to pay £50m VAT on its new embassy building in Vauxhall, London, after insisting that official guidelines state that the tax should be applied to construction services on a UK property. However, the US has demanded that international codes permit non-payment of VAT on the building. In a statement, the US embassy said that its current talks with the UK 'are similar to discussions we have had all over the world where we have built diplomatic properties.' Conservative leader of Wandsworth borough council, Edward Lister, wrote a letter to Alistair Darling and expressed his concerns that if the UK were not to make an exemption on this occasion then there would be 'potential for substantial future economic benefits and tax revenues being lost if the Treasury's rigid attitude prevails', reports the Financial Times . A Whitehall source is claimed to have said that one resolution could be for the US to make a similar allowance for a UK building project in Washington which would act as a reimbursement.