The Value Added Tax (Amendment) (No. 2) Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 1 September 2005, amend Parts V (accounting and records), VA (reimbursement arrangements) and XVI(A) (fiscal and other warehousing regimes) of the Value Added Tax Regulations 1995 (S.I.1995/2518) (“the principal Regulations”).

Credit for, or repayment of, overstated or overpaid VAT

The amendments to the principal Regulations are consequential amendments arising from amendments made to section 80 and section 80A of the Value Added Tax Act 1994 by sections 3 and 4 of the Finance (No. 2) Act 2005 (c. 22).

Regulation 2 amends the heading to regulation 37 to reflect the changes from claims for recovery of overpaid VAT to claims for credit for, or repayment of, overstated or overpaid VAT.

Regulation 3 amends the definitions of “claims” and “reimbursement arrangements” in regulation 43A to reflect the change to claims for credit of output tax over-accounted for to the Commissioners or assessed by them as output tax that was not output tax due.

Regulation 4 amends regulation 43B to reflect the change to claims for credit of output tax over-accounted for or assessed by the Commissioners as output tax that was not output tax due.

Regulation 5 amends regulation 43C to reflect the change to claims for credit of output tax over-accounted for or assessed and substitutes a new paragraph (d). This provides for notification by the claimant to the Commissioners of any credit he has not reimbursed to consumers within 90 days. It also adds a new paragraph (da) that provides for the claimant to repay to the Commissioners any amount paid (or repaid) and not reimbursed.

Regulation 6 substitutes a new regulation 43D of the principal Regulations. The new regulation provides for notification to be given by the claimant to the Commissioners of any credit not reimbursed to consumers and for any amount paid (or repaid) to be repaid to the Commissioners within the respective time limits laid down.

Regulation 7 amends regulation 43F to reflect the change to claims for credit of output tax over-accounted for or assessed by the Commissioners as output tax that was not output tax due.

Regulation 8 amends regulation 43G to reflect the change to claims for credit of output tax over-accounted for or assessed and substitutes a new sub-paragraph (d). This provides for notification by the claimant to the Commissioners of any credit he has not reimbursed to consumers in accordance with the undertaking given by him. It also adds a new sub-paragraph (da) that provides for the claimant to repay to the Commissioners any amount paid (or repaid) and/or any interest that has not been reimbursed in accordance with the undertaking.

Regulation 9 deletes regulation 43H of the principal Regulations. This was a transitional provision which is no longer required.

Goods subject to warehousing regime: place of supply

Supplies of goods subject to a (customs) warehousing regime are not subject to VAT(1).

Regulation 10 provides(2) for those arrangements not to apply if a taxable person(3) supplies the goods to a non-taxable person by way of retail(4) or to be sold by the latter by retail, and the whole or part of the supplier’s business consists in supplying to a number of persons goods to be sold, by them or others, by retail(5).

(1)

There are a number of requirements, see sections 18(1), 18(6) and 18(7) of the Value Added Tax Act 1994 (c. 23).

(2)

By inserting a new regulation 145K into the principal Regulations.

(3)

Or someone who would be a taxable person but for section 18(1) of the Value Added Tax Act 1994 (c. 23).

(4)

Despite Commission Regulation (EEC) No 2454/93 Article 527(2) (OJ No L 253, 11.10.93, p 1) (Article 527 substituted by Commission Regulation (EC) No 993/2001 (OJ L No 141, 28.5.01, p 1)) providing that customs warehousing authorisations shall not be granted if the premises of customs warehouses or the storage facilities are used for the purpose of retail sale.

(5)

See the Value Added Tax Act 1994 (c. 23) Schedule 6 paragraph 2 (supply of goods by taxable person to non-taxable person for subsequent retail sale).