The Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-related Payments) Order 2023

Citation, commencement and effect

1.—(1) This Order may be cited as the Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-related Payments) Order 2023 and comes into force on 1st May 2023.

(2) This Order has effect in relation to goods removed to Northern Ireland(1), or exported, on or after 1 May 2023.

Interpretation

2.—(1) In this Order—

“VATA” means the Value Added Tax Act 1994;

“claim” means claim for a VAT-related payment(2) under this Order;

“prescribed period” has the meaning given in article 8(5).

(2) For the purposes of this Order a person is only to be treated as having a business establishment in the United Kingdom if that establishment has a permanent presence of both the human and technical resources necessary for the provision of the taxable supplies for which that business is required to account as a taxable person(3).

(3) Where, in this Order, the Commissioners(4) are empowered to make provision by way of a direction—

(a) they may make different provision for different cases and so a direction may be made generally or for a particular case or class of cases; and

(b) a direction may be published in a public notice or addressed to an individual as the Commissioners think fit(5).

VAT-related payments

3.  A person is entitled, on making a claim, to a VAT-related payment in respect of a relevant supply(6) of a description specified in article 4.

4.—(1) The supply specified for the purposes of article 3 is a relevant supply of a motor vehicle (“the vehicle”) which meets the conditions specified in paragraph (2).

(2) The conditions specified in this paragraph are that—

(a) the vehicle is not an excluded good;

(b) the vehicle has been removed to Northern Ireland or exported to a member State; and

(c) the person who took possession of the vehicle in Great Britain or the Isle of Man is—

(i) in a case where the vehicle is removed to Northern Ireland, registered under VATA(7) at the time of the removal; or

(ii) in a case where the vehicle is exported to a member State, identified by that member State as being taxable in that member State(8) at the time of the export.

(3) In this article—

“antique” and “collectors’ item” have the meanings given in article 2 of the Value Added Tax (Special Provisions) Order 1995(9);

“excluded good” means a good which is an antique, collectors’ item or work of art;

“motor vehicle” means a mechanically propelled vehicle which is registered under either the Vehicle and Excise and Registration Act 1994(10) or the Licensing and Registration of Vehicles Act 1985 of the Isle of Man(11);

“work of art” has the meaning given in section 21(6) of VATA(12).

VAT-related payment: consideration for supply

5.—(1) Where the consideration for a relevant supply of goods (the goods) is more than the value of the goods at the time of their removal to Northern Ireland or export, section 50B(4) of VATA applies to that supply as if the consideration for the supply is the value of the goods at the time of their removal or export.

(2) The value of the goods at the time of their removal or export is to be taken to be the amount that would be payable as consideration if the goods were to be supplied at that time between two persons who were standing in no such relationship with each other as would affect that consideration.

Payment representative

6.—(1) The Commissioners may, as a condition of allowing a claim under article 8 (a claim) to be paid, direct that a non-established claimant must appoint a person to act as a payment representative on that claimant’s behalf in relation to that claim.

(2) A non-established claimant may, with the agreement of the Commissioners, appoint a person as a payment representative to act on that claimant’s behalf in relation to a claim.

(3) A payment representative is —

(a) entitled to act on behalf of the principal for any purpose connected with a claim; and

(b) jointly and severally liable with the principal for any liability resulting from a claim being incorrect.

(4) A person may only be appointed as a payment representative under paragraph (1) or (2) if that person is registered under VATA and has a business establishment in the United Kingdom.

(5) A payment representative is not by virtue of sub-paragraph (3)(b) guilty of any offence except in so far as—

(a) the payment representative has consented to, or connived in, the commission of the offence by the principal; or

(b) the commission of the offence by the principal is attributable to any neglect on the part of the payment representative.

(6) The Commissioners may direct the manner and circumstances in which a person is to be appointed as a payment representative and a direction may include such provision as the Commissioners think fit for the maintenance of a register of the names of payment representatives recorded against the names of their principals.

(7) Where the Commissioners have made a direction under paragraph (1), the person (P) to whom the notice is addressed must not be treated as having been directed to appoint a payment representative unless the Commissioners have either—

(a) served a notice of the direction on P; or

(b) taken all such other steps as appear to them to be reasonable for bringing the direction to the attention of P.

(8) In this article—

“non-established claimant” means a person who—

(a)

does not have a business establishment in the United Kingdom; and

(b)

does not have an appointed VAT representative(13);

“payment representative” means a person appointed in accordance with paragraph (1) or (2);

“principal” in relation to a payment representative means the non-established claimant on whose behalf that payment representative has been appointed.

Method of claiming

7.—(1) A taxable person who has a business establishment in the United Kingdom and who makes a claim must make it by accounting for it in that person’s VAT return as if it were input tax(14) incurred on the relevant supply at the relevant time(15).

(2) Accordingly, any provision made by or under any enactment that applies to input tax applies to a claim made under paragraph (1), as if that claim were accounting for input tax.

(3) A person to whom paragraph (1) does not apply must make a claim in accordance with article 8.

8.—(1) A person making a claim under this article (the claim) must—

(a) make it in the form and manner; and

(b) furnish such information or supporting documentation;

as the Commissioners direct.

(2) The claim—

(a) must be made in respect of the prescribed period in which the relevant time applicable to the relevant supply occurs; and

(b) may not be made if a period of more than 4 years has elapsed since the end of the prescribed period during which the relevant time applicable to the relevant supply occurred.

(3) Save as the Commissioners otherwise direct, no more than 4 claims may be made in respect of a prescribed period.

(4) The claim may not be made for a period of less than 3 months and may not be made for a longer period than a prescribed period, provided that the claim may be made for a period of less than 3 months where either—

(a) that period represents the final part of a prescribed period; or

(b) a prescribed period is a period of less than 3 months.

(5) Subject to paragraph (6), a prescribed period is a period of 12 months beginning on the first day of the month specified by the Commissioners in a direction.

(6) The Commissioners may direct that a prescribed period is a period of less than or more than 12 months.

Error correction

9.—(1) This article applies where a person (P) has made a claim under article 8 which has overstated or understated P’s entitlement to a VAT-related payment (the entitlement).

(2) Where P has overstated the entitlement P must account for the overstatement in the form and manner directed by the Commissioners and by the earlier of the following—

(a) the date on which P next makes a claim after the overstatement comes to P’s knowledge; or

(b) the end of the prescribed period in which the overstatement comes to P’s knowledge.

(3) Where P has understated the entitlement P may make a claim under article 8 for the amount understated. The claim for the understatement may be made solely in connection with the amount understated or combined with a claim for a further VAT-related payment.

(4) Paragraphs (2) and (3) do not apply if a period of 4 years has elapsed since the end of the prescribed period during which the relevant time applicable to the relevant supply which is the subject of the accounting under paragraph (2) or the claim under paragraph (3) occurs.

Denomination of payment and deduction of bank charges

10.—(1) This article applies where a VAT-related payment is made as a result of a claim under article 8.

(2) The payment must be made in pounds sterling.

(3) Where the payment is to be made to a person in a country other than the United Kingdom, the Commissioners may reduce the amount of the payment by the amount of any bank charges or costs incurred as a result thereof.

Records

11.—(1) A person who makes a claim must keep such records as the Commissioners may direct.

(2) The records which are required to be maintained under paragraph (1) must be preserved—

(a) in the form and manner directed by the Commissioners; and

(b) for such period as the Commissioners may direct not exceeding 6 years beginning with the date of the claim to which they relate.

Application of Schedule 36 to the Finance Act 2008

12.  Schedule 36 to the Finance Act 2008(16) (information and inspection powers) applies as if the reference to any tax in paragraph 64(1) of that Schedule includes a reference to a claim made under article 8.

Offences

13.—(1) Section 72 of VATA(17) (offences) applies with the following modifications.

(2) Subsections (1) and (8) apply as if any references in those subsections—

(a) to the evasion of VAT include a reference to the obtaining of a VAT-related payment under article 8; and

(b) to the amount of the VAT are references, in relation to the obtaining of a VAT-related payment, to the amount falsely claimed by way of the claim made under article 8.

(3) Anything done for the purposes of a claim under article 8, including the production, furnishing or sending of any document and the furnishing of any information or any statement in relation to such a claim, is to be treated as being done for the purposes of VATA.

(4) Subsection (5) applies as if the reference to a refund under section 35 or 36 of VATA includes a reference to a VAT-related payment under article 8.

Penalties for errors

14.—(1) Schedule 24 to the Finance Act 2007(18) (penalties for errors) (the Schedule) applies to a claim made under article 8 (the claim) with the following modifications.

(2) Part 1(liability for penalty) applies as if—

(a) the claim, including any return, statement or declaration made in connection with the claim, is a document of a kind listed in the Table in paragraph 1 of the Schedule;

(b) the claim concerns a repayment of VAT; and

(c) references to an assessment include an assessment under article 15;

and other Parts of the Schedule apply in accordance with these modifications.

(3) References in the Schedule to a tax period include references to a prescribed period.

Assessment: overclaims

15.—(1) Where a person has made a claim under article 8 and, as a result of that claim, an amount has been paid or credited to that person which ought not to have been paid or credited, or which would not have been so paid or credited had the facts been known or been as they later turn out to be, the Commissioners may assess that amount to the best of their judgment and notify it to that person.

(2) An assessment under paragraph (1) must, subject to paragraph (4), be made within the time limit provided for in paragraph (3) and must not be made after the later of the following—

(a) 2 years after the end of the prescribed period in which the claim was paid or credited; or

(b) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of an assessment, comes to their knowledge,

but (subject to paragraph (3)) where such further evidence comes to the Commissioners’ knowledge after the making of an assessment under paragraph (1), another assessment may be made under that paragraph, in addition to any earlier assessment.

(3) Subject to paragraph (4), an assessment under paragraph (1) must not be made more than 4 years after the end of the prescribed period in which the claim was paid or credited.

(4) Subsections (4) to (4B) of section 77 of VATA(19) (assessments: time limits and supplementary assessments) apply to an assessment under paragraph (1) as if the references to a loss of VAT included references to a payment or crediting of a claim or part of a claim under article 8 which was not due to the claimant.

(5) Paragraph (6) applies, subject to the provisions of VATA as to appeals which are applied by article 17, where an assessment has been made and notified to any person under paragraph (1).

(6) Where this paragraph applies—

(a) the assessment is to be paid in the form and manner directed by the Commissioners; and

(b) paragraph 5 of Schedule 11 (administration, collection and enforcement: recovery of VAT etc.) to VATA(20) applies to the amount assessed as if it is VAT due from the person assessed.

Set-off

16.  In any case where—

(a) an amount is due from the Commissioners to a person (P) under article 8; and

(b) P is liable to pay a sum by way of an assessment under this Order, or a penalty under—

(i) VATA;

(ii) Schedule 24 to the Finance Act 2007; or

(iii) Schedule 36 to the Finance Act 2008;

the amount referred to in paragraph (a) is set-off against the sum referred to in paragraph (b) and, accordingly, to the extent of the set-off, the obligations of the Commissioners and P are discharged.

Appeals

17.—(1) An appeal lies to a tribunal(21) in respect of the following—

(a) the amount of a VAT-related payment pursuant to a claim under article 8; and

(b) an assessment under article 15.

(2) Part 5 of VATA(22) (reviews and appeals), and any orders or regulations made under that Part, apply for the purposes of this Order subject to the following modifications—

(a) an appeal under paragraph (1) is to be treated as an appeal which lies to the tribunal under section 83(1) of VATA but not under any particular paragraph of that subsection; and

(b) section 84 of VATA is to apply as if subsections (3) and (4) of that section include a reference to appeals against decisions relating to matters mentioned in sub-paragraphs (1)(a) and (b).

Steve Double

Andrew Stephenson

Two of the Lords Commissioners of His Majesty’s Treasury

24th January 2023