Section 196 and Schedule 27: Anti-Forestalling Charge to Value Added Tax
Summary
1.Section 196 and Schedule 27 relate to the imposition of VAT on supplies of self storage and approved alterations to protected buildings from 1 October 2012. The section and Schedule introduce an anti-forestalling charge applying to such supplies if they are treated as taking place before 1 October 2012 for VAT purposes but the services are carried out or performed, or materials are incorporated into the building, on or after that date. The charge is treated as VAT and is due on 1 October 2012.
Details of the Schedule
2.Paragraph 1 provides for definitions.
3.Paragraph 2 provides for an anti-forestalling charge to apply to a relevant supply where:
it is treated as taking place on or after 21 March 2012, but
if it was treated as taking place on 1 October 2012, it would have been affected by the change in VAT liability, and
the relevant supplies are, in respect of services, carried out or provided, and, in respect of building materials incorporated into the building, after 1 October 2012 (‘the post-change period’).
It also provides that the charge is to be treated as VAT.
4.Paragraph 3 provides a description of the supplies of goods and services covered by the Schedule. For self storage supplies, this includes rights or options to receive self storage in future.
5.Paragraph 4 describes the circumstances in which the relevant supplies are linked to the post-change period.
6.Paragraph 5 provides for a power to modify the Schedule by Treasury Order in relation to preventing an anti-forestalling charge from arising in relation to any description of the supplies specified in the Schedule.
7.Paragraph 6 provides that an anti-forestalling charge is the liability of the supplier and that it is due on 1 October 2012. Where a supplier is part of a VAT group registration, it provides that the charge is the liability of the representative member of the group.
8.Paragraph 7 provides the method for the calculation of the anti-forestalling charge including the rate of VAT to apply and how to apportion consideration for supplies partly linked to the post-change period.
9.Paragraph 8 provides that a person liable for the anti-forestalling charge who is no longer a taxable person when it becomes due should account for the charge on its last VAT return. If this is not done and HMRC assess for the charge, any interest is only chargeable from 1 October 2012.
10.Paragraph 9 provides that where there is an anti-forestalling charge under the Schedule, the consideration for the supply is to be increased by the amount of the charge, unless the contract provides otherwise.
11.Paragraph 10 provides that the VAT Regulations 1995 (SI 1995/2518) may be amended to make provision for changes to invoices in respect of the anti-forestalling charge.
Background Note
12.In his Budget Statement of 21 March 2012, the Chancellor announced changes to the VAT liability of grants of self storage of goods and approved alterations of protected buildings with effect from 1 October 2012. On 21 March 2012, the Exchequer Secretary to the Treasury, in a Written Ministerial Statement, explained that the Government would introduce anti-forestalling legislation to ensure that these liability changes have effect in relation to any supplies contracted for from 21 March 2012 and which are performed on or after 1 October 2012. (Protected buildings are listed buildings or scheduled monuments which are dwellings or are used for residential or charitable non-business purposes).
