The Value Added Tax (Cars) (Amendment) (No. 2) Order 1995

Explanatory Note

(This note is not part of the Order)

This Order, which comes into force on 1st August 1995, further amends the Value Added Tax (Cars) Order 1992 (No. 3122) (the principal Order).

Article 3 of the Order amends article 4 of the principal Order which provides for supplies of motor cars that have been subject to input tax restriction to be treated as neither a supply of goods nor a supply of services. In particular, a new sub-paragraph (f) is inserted into paragraph (1) of article 4 which provides that letting a motor car on hire free of charge or for a nominal consideration and making a motor car available for private use, whether or not for a consideration, are treated as neither supplies of goods nor supplies of services.

Article 4 inserts a new article 4A into the principal Order which disapplies the normal VAT supply rules applicable to the private use of business assets where the asset is a motor car and it is used or made available in circumstances which would, but for those rules, be the subject of a self supply under the provisions of articles 5 and 6 of the principal Order as amended by articles 5 and 6 of this Order.

Articles 5 and 6 make consequential changes to the self supply provisions in articles 5 and 6 of the principal Order to reflect the changes to the rules relating to recovery of input tax on motor cars used exclusively for business purposes. Article 7 inserts a new article 6A into the principal Order which provides for the definition of use exclusively for business purposes which applies for input tax recovery to apply also to the self supply provisions in articles 5 and 6.

Article 8 amends article 8 of the principal Order to enable second hand motor cars which have been supplied to a taxable person under the margin scheme applicable to the supply of motor cars which are subject to restriction of input tax recovery to be sold under the second-hand car margin scheme provided for by article 8. In addition sub-paragraph (3)(d) and paragraph (4) of the article are deleted.

Finally, article 9 of the Order revokes the Value Added Tax (Cars) (Amendment) Order 1993 (No. 2951) which is spent.