The Value Added Tax (Amendment) (No.3) Regulations 2014

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations come into force on 1st January 2015 with the exception of regulations 1, 2 and 9, which come into force on 1st October 2014. They amend the Value Added Tax Regulations 1995 (S.I. 1995/2518) (“the Principal Regulations”).

Council Directive 2006/112/EC(1) (“the Principal VAT Directive”) establishes a common system of value added tax applicable throughout the European Union. Council Directive 2008/08/EU(2) (“the 2008 Directive”) amended Chapter 6 of Title XII of the Principal VAT Directive (the special scheme for non-established taxable persons supplying electronic services to non-taxable persons; “the Non-Union Scheme”). The main change was to extend the Non-Union Scheme to include supplies of telecommunications services and radio and television broadcasting services. The 2008 Directive also inserted a new Section 3 of Chapter 6 into the Principal VAT Directive to create the special scheme for telecommunications, broadcasting or electronic services supplied by taxable persons established within the Community but not in the member State of consumption (“the Union Scheme”).

As a result of these amendments, changes are made to the Principal Regulations to prescribe the form and manner of making registration applications and communicating other information to the Commissioners in relation to the Union and Non-Union schemes. The changes also prescribe how certain adjustments are to be made, how certain repayments of relief are to be made, ensure that a person using the Union Scheme in another member State can recover VAT incurred in the United Kingdom and make other consequential changes.

Regulation 3 amends the definition of “claim” in Part 5A (reimbursement arrangements) of the Principal Regulations.

Regulations 4 to 7 amend Part 19 (bad debt relief) of the Principal Regulations.

Regulation 5 inserts a new regulation 166AA into the Principal Regulations to prescribe the manner of making a claim under section 36 of the Value Added Tax Act 1994 (c. 23) (“the Act”) where the VAT on the relevant supply has been accounted for by a person using the Union Scheme in another member State or by a person using the Non-Union Scheme (whether in the United Kingdom or in another member State).

Regulation 6 amends regulation 168 (records to be kept by claimant) to provide that the reference to “prescribed accounting period” in that regulation is to be read as “tax period” where new regulation 166AA applies.

Regulation 7 inserts new regulations 171A and 171B. New regulation 171A prescribes the method of calculation of a repayment required by regulation 171(1) where there is a reduction in consideration for a supply and where the VAT has been accounted for on a relevant special scheme return or a relevant non-UK return. New regulation 171B prescribes the timing and method of making a repayment required by regulation 171(1) or (3) of the Principal Regulations where the VAT on the relevant supply has been accounted for on a relevant special scheme return or a relevant non-UK return.

Regulation 8 amends Part 20 (repayment to Community traders) of the Principal Regulations to permit a person who uses a Union Scheme in another member State and who is not registered for VAT in the United Kingdom to make a claim to repayment under Part 20.

Regulation 9 inserts a new Part 26 into the Principal Regulations. Part 26 prescribes how registration requests are to be made to the Commissioners under both the Union and Non-Union Scheme (including the requirement to make a declaration in relation to information in a registration request).

Regulation 10 amends Part 26, as inserted by regulation 9, with effect from 1st January 2015, to prescribe additionally how returns and notification of changes of information are to be made to the Commissioners.

Regulation 11 inserts a new Part 27 into the Principal Regulations. Part 27 prescribes how certain errors are to be corrected and how certain claims are to be made in relation to UK VAT on returns made by those using a Union Scheme in another member State or by those using the Non-Union Scheme (whether in the United Kingdom or in another member State). Part 27 also disapplies paragraph 17(1) of Schedule 3BA to the Act (scheme participants who are also registered under the Act not to be subject to obligations in relation to relevant supplies) in relation to an input tax obligation.

A Tax Information and Impact Note covering this instrument was published at Autumn Statement 2013 and is available on the HMRC website at HM Revenue & Customs: Tax Information and Impact Notes (TIINs). It remains an accurate summary of the impacts that apply to this instrument.

A transposition note setting out how the Government has implemented the main provisions of the 2008 Directive, which take effect from 1st January 2015, is annexed to the Explanatory Memorandum which is available alongside these Regulations on the National Archives website http://www.legislation.gov.uk.

(1)

OJ No L 347, 11.12.06, p. 1.

(2)

OJ No L 44, 20.2.08, p. 11.