The Value Added Tax (Cars) (Amendment) Order 1999

Explanatory Note

(This note is not part of the Order)

This Order amends the Value Added Tax (Cars) Order 1992 (S.I. 1992/3122) (the Cars Order). Part of the changes take effect on 1st December 1999 and part on 1st March 2000.

The Order makes amendments to the Cars Order consequent upon amendments to the Value Added Tax (Input Tax) Order 1992 (S.I. 1992/3222). It also simplifies the provisions whereby persons must account for VAT when putting a car on which they recovered VAT to a use which would not qualify for recovery, and extends them to cars obtained on a transfer of a going concern.

Article 3 of the Order amends article 2 of the Cars Order to remove London-type taxis and twelve seater vehicles that do not meet road safety regulations from the exceptions to the definition of “motor car”. It adds vehicles that have a payload of one tonne or more. This change takes effect on 1st December 1999.

Articles 5, 6, 7 and 8 make changes to articles 5 and 6 of the Cars Order. The latter articles require someone who has obtained input tax credit on the purchase of a car, and has put it to a use that would not qualify for such credit, to account for VAT on the car (a “self supply”). The first change is that the separate provisions in articles 5 and 6 of the Cars Order for ordinary business cars and tools of trade cars respectively are combined and simplified in article 5. Additionally, sub-paragraph (d) is inserted into paragraph 1 of Article 5 together with a new paragraph 2A extending the self-supply provisions to people who obtained cars on transfers of going concerns from persons who were entitled to input tax credit. Articles 4 and 9 make consequential amendments to articles 4A and 7 of the Cars Order. These changes take effect on 1st December 1999.

Article 10 removes a supply under the input tax margin scheme, which will be abolished on 1st March 2000, as a qualifying condition for use of the second hand goods margin scheme for cars. The change takes effect on 1st March 2000. The wording allows persons to continue to use the second hand goods margin scheme for cars bought under the input tax margin scheme before 1st March 2000 but sold on or after that date.