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Finance Act 2012

Details of the Section

2.Subsection (2) inserts a provision into section 43(2C)(c) of the Value Added Tax Act 1994 (VATA). Section 43(2C)(c) provides that the value of intra-group supplies falling within section 43(2A) are to be treated as a reverse charge in accordance with section 8 of VATA. The inserted provision provides that the supplies may be subject to the valuation provisions in new paragraph 8A of Schedule 6.

3.Subsection (3) provides for a right of appeal for the taxpayer against an open market valuation direction.

4.Subsection (4) provides for any subsequent order varying the valuation provisions to be subject to the affirmative resolution procedure.

5.Subsection (6) provides that paragraph 1 of Schedule 6 does not apply to supplies valued in accordance with new paragraph 8A of that schedule.

6.Subsection (7) inserts new paragraph 8A into Schedule 6

7.New paragraph 8A applies where two conditions (set out in new paragraph 8A(1)) are met.  Firstly a supply giving rise to the reverse charge is made and secondly the representative member of the VAT group satisfies the Commissioners as to the value of bought in supplies.

8.New paragraphs 8A(3) to (5) make provisions as to how the intra-group supplies shall be valued. Where the value of the bought-in supply or supplies is at least open market value, the value of the intra-group supply is the value of the bought-in supply or supplies (or the element thereof that is a cost component of the intra-group supply in question). Where the value of any bought-in supply is less than its open market value, the Commissioners may direct that the intra-group supply be valued taking an open market value for that bought-in supply (or the element thereof that is a cost component of the intra-group supply in question).

9.New paragraph 8A(6) provides that any direction must be given by notice in writing and must be within 3 years from the date of the intra-group supply.

10.New paragraphs 8A(7) and (8) allow the Treasury by order to amend the valuation provision and make any consequential provisions necessary.

11.Sub-section (8) provides that the changes will have effect from Royal Assent. The current concession will continue to apply until that point.

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