The Value Added Tax (Distance Selling and Miscellaneous Amendments No. 2) Regulations 2021

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend certain provisions in the Value Added Tax Act 1994 (c. 23) (“VATA”) which concern the application of VAT in relation to goods in Northern Ireland pursuant to the United Kingdom’s obligations under the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement (“the Protocol”).

The amendments made by these Regulations include one minor correction in regulation 4. The other amendments are in relation to provisions about distance selling enacted in the Finance Act 2021 (“FA 2021”) which introduced two new VAT schemes applicable in relation to Northern Ireland by virtue of the United Kingdom’s participation in the Protocol. These new schemes are designed to simplify VAT accounting for the sale of goods direct to consumers by suppliers based in the EU and by suppliers who import goods into the EU for sale. The first of these schemes is the intra-Community distance selling one stop shop scheme, known as the OSS, which was enacted by FA 2021 as a new provision inserted into VATA in Schedule 9ZD. The second is the distance selling of imported goods scheme, known as the import one stop shop, or IOSS, which was similarly inserted in Schedule 9ZE to VATA. Both of these schemes only apply in the United Kingdom in relation to goods in Northern Ireland. FA 2021 also made consequential changes about distance selling to other provisions in VATA concerning VAT in Northern Ireland, namely in Schedules 9ZA, 9ZB and 9ZC.

Regulations 2 to 5 amend Schedule 9ZA to VATA.

Regulation 3 inserts a new provision into paragraph 7 of that Schedule to allow persons registered under the OSS scheme to be identified for the purposes of VAT in Northern Ireland.

Regulation 4 rectifies a minor error.

Regulation 5 omits superfluous wording in paragraph 48 of that Schedule in relation to a cross-reference to the definition of “intra-Community distance sales of goods” in Council Directive 2006/112/EC. This is the EU Directive which includes details of the OSS and IOSS schemes which all of the member States of the EU and the United Kingdom (but only in relation to goods in Northern Ireland) are required to enact in their domestic law.

Regulation 6 amends paragraph 29 of Schedule 9ZB to VATA which establishes rules for the place of supply (for VAT purposes) of the distance selling of goods from the EU to consumers in Northern Ireland. The amendment makes the provision consistent with the terminology used in Schedule 9ZD.

Regulation 7 amends paragraph 1B of Schedule 9ZC to VATA so that the references to the IOSS scheme in the inserted section 5B of VATA are consistent with terminology used in Schedule 9ZE to VATA, and that certain references to Great Britain are also applicable in relation to the Isle of Man.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins .