Finance Act 2021

Value added tax U.K.

92 Extension of temporary 5% reduced rate for hospitality and tourism sectors U.K.

In Articles 2 and 5 of the Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Coronavirus) Order 2020 (S.I. 2020/728), for “31st March 2021” substitute “ 30th September 2021 ”.

93 Temporary 12.5% reduced rate for hospitality and tourism sectors U.K.

(1) The modifications made by Articles 3 and 4 of the Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Coronavirus) Order 2020 (S.I. 2020/728) (“the Reduced Rate Order”) continue to have effect (despite Article 2 of that Order) during the relevant period.

(2) During that period, in relation to a supply that is of a description within Groups 14 to 16 in Part 2 of Schedule 7A to VATA 1994, the reference in section 29A(1) of that Act to “5 per cent” is to be read as a reference to “12.5 per cent” (and any reference elsewhere in that Act to a rate of 5% in the context of a supply of a description specified in Schedule 7A is to be read accordingly).

(3) The modifications made by Article 6 of the Reduced Rate Order also continue to have effect (despite Article 5 of that Order) during the relevant period, but subject to the modifications in subsection (4).

(4) The modifications to Article 6 of the Reduced Rate Order mentioned in subsection (3) are—

(a) as if in paragraph (a), for “4.5” there were substituted “ 8.5 ”;

(b) as if in paragraph (b), for “0” there were substituted “ 5.5 ”;

(c) as if in paragraph (c), for “1” there were substituted “ 4 ”.

(5) The relevant period means the period—

(a) beginning with the day after the day on which the modifications made by Articles 3, 4 and 6 of the Reduced Rate Order would otherwise cease to apply by virtue of the ending of the periods mentioned in Articles 2 and 5 of that Order (whether in accordance with section 92 or any regulations made under section 26B or 29A(3) of VATA 1994), and

(b) ending on 31 March 2022.

(6) The Treasury may by regulations—

(a) repeal subsections (1) to (5);

(b) amend subsection (5) so as to substitute for the period for the time being mentioned there such other period as they consider appropriate.

(7) A statutory instrument containing regulations under subsection (6) that would increase the rate of value added tax to be charged on a supply must be laid before the House of Commons after being made and, unless approved by that House before the end of the period of 28 days beginning with the date on which the instrument is made, ceases to have effect at the end of that period.

(8) Any other statutory instrument containing regulations under subsection (6) is subject to annulment in pursuance of a resolution of the House of Commons.

(9) The fact that a statutory instrument ceases to have effect as a result of subsection (7) does not affect—

(a) anything previously done under the instrument, or

(b) the making of a new instrument.

(10) In calculating the period of 28 days mentioned in subsection (7), no account is to be taken of any time—

(a) during which Parliament is dissolved or prorogued, or

(b) during which the House of Commons is adjourned for more than four days.

94 Extending digital record-keeping for VAT purposes to all businesses U.K.

In paragraph 6 of Schedule 11 to VATA 1994 (duty of taxable person to keep records), omit sub-paragraphs (7) to (9).

95 Distance selling: Northern Ireland U.K.

(1) In Schedule 18, which makes provision in relation to the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement about value added tax and distance selling—

(a) Part 1 makes provision amending—

(i) the criteria for registration under Part 9 of Schedule 9ZA to VATA 1994 (value added tax on acquisitions in Northern Ireland from member States: registration in respect of distance sales), and

(ii) the application of the place of supply rules in Part 5 of Schedule 9ZB to VATA 1994 (goods removed to or from Northern Ireland: rules relating to particular supplies);

(b) Part 2 makes provision implementing the European Union schemes known as the One Stop Shop (“OSS”) and the Import One Stop Shop (“IOSS”);

(c) Part 3 makes provision amending Schedule 9ZC to VATA 1994 (online sales by overseas persons and low value importations: modifications relating to the Northern Ireland Protocol) to omit Part 2 of that Schedule (modifications of the Value Added Tax (Imported Goods) Relief Order 1984);

(d) Part 4 makes provision about supplies of goods by persons established outside the United Kingdom that are facilitated by online marketplaces.

(2) The Treasury may by regulations made by statutory instrument make such provision as they consider appropriate in consequence of this section or Schedule 18, including provision amending, repealing or revoking any provision of an Act whenever passed or made (including this Act and any Act amended by it).

(3) The Treasury may by regulations made by statutory instrument make such transitional, transitory, saving, supplementary or incidental provision as they consider appropriate in connection with the coming into force of this section or Schedule 18.

(4) Regulations under subsections (2) and (3) may (among other things)—

(a) confer on a person specified in the regulations a discretion to do anything under, or for the purposes of, the regulations;

(b) make provision by reference to things specified in a notice published in accordance with the regulations;

(c) make different provision for different purposes or areas.

(5) A statutory instrument that—

(a) contains (whether alone or with other provision) regulations under subsection (2), and

(b) is not subject to any requirement under section 96 that the instrument be laid before, and approved by a resolution of, the House of Commons after being made,

is subject to annulment in pursuance of a resolution of the House of Commons.

(6) This subsection and the following provisions come into force on the day on which this Act is passed—

(a) subsection (1) and Schedule 18 so far as making provision for anything to be done by regulations, directions or public notice, and

(b) subsections (2) to (5), (7) and (8).

(7) Subsection (1) and Schedule 18 come into force for all remaining purposes on such day as the Treasury may by regulations made by statutory instrument appoint.

(8) Regulations under subsection (7) may appoint different days for different purposes.

Commencement Information

I1 S. 95(1) in force for specified purposes and s. 95(2)-(8) in force at Royal Assent, see s. 95(6)

I2 S. 95(1) in force at 1.7.2021 for specified purposes by S.I. 2021/770, regs. 3, 4 (with regs. 5-7)

I3 S. 95(1) in force at 1.3.2024 for specified purposes by S.I. 2024/130, reg. 3

96 Distance selling: power to make further provision U.K.

(1) The Treasury may by regulations made by statutory instrument make such provision relating to value added tax as they consider appropriate in relation to the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement—

(a) for the purposes of, or in connection with, giving effect to Council Directive (EU) 2017/2455 of 5 December 2017 amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods, or

(b) otherwise for the purposes of dealing with matters arising out of, or related to, that Directive.

(2) No regulations may be made under this section on or after 1 April 2024.

(3) Regulations under this section—

(a) may make any such provision as might be made by an Act of Parliament, including provision amending or repealing any provision of this Act, but

(b) may not make provision taking effect from a date earlier than that of the making of the regulations.

(4) A statutory instrument containing (whether alone or with other provision) regulations under this section that amend or repeal any Act of Parliament must be laid before the House of Commons after being made.

(5) Regulations contained in a statutory instrument laid before the House of Commons under subsection (4) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of the House of Commons.

(6) In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—

(a) Parliament is dissolved or prorogued, or

(b) the House of Commons is adjourned for more than four days.

(7) If regulations cease to have effect as a result of subsection (5), that does not—

(a) affect the validity of anything previously done under or by virtue of the instrument, or

(b) prevent the making of new regulations.

(8) A statutory instrument containing (whether alone or with other provision) regulations under this section to which subsection (4) does not apply is subject to annulment in pursuance of a resolution of the House of Commons.

(9) This section comes into force on the day on which this Act is passed.

97 Supply of imported works of art etc U.K.

(1) In Schedule 6 to VATA 1994 (valuation: special cases), after paragraph 11 insert—

“11A (1) Sub-paragraph (2) applies to goods that—

(a) fall within subsection (5) of section 21 (works of art etc), and

(b) are treated as supplied in the United Kingdom as a result of section 7(5B) (importation of consignments with an intrinsic value not exceeding £135).

(2) The value of a supply of goods to which this sub-paragraph applies is to be taken to be an amount equal to 25% of the amount that, apart from this sub-paragraph, would be its value for the purposes of this Act.

(3) An order under section 2(2) may contain provision making such alteration of the percentage for the time being specified in sub-paragraph (2) as the Treasury consider appropriate in consequence of any increase or decrease by that order of the rate of VAT.”

(2) The amendment made by subsection (1) has effect in relation to supplies made on or after IP completion day.

98 Continuing effect of principle preventing the abuse of the VAT system U.K.

(1) In section 42 of TCTA 2018 (EU law relating to VAT), after subsection (4) insert—

“(4A) Accordingly, that principle may continue to be relied upon in determining any matter relating to value added tax (including in determining the effect of any provision made by or under an enactment).”

(2) That section has effect, and is to be deemed always to have had effect, with the amendment made by subsection (1).

99 Deferring VAT payment by reason of the coronavirus emergency U.K.

(1) Schedule 19 makes provision about—

(a) powers of the Commissioners for Her Majesty's Revenue and Customs to agree that payment of sums to meet liabilities described in article 5 of the Finance Act 2008, Section 135 (Coronavirus) Order 2020 (S.I. 2020/934) (“the Coronavirus Order 2020”) may be further deferred,

(b) surcharges arising on such sums, and

(c) a penalty payable in connection with non-payment of such sums.

(2) Subsection (1) and Schedule 19 are to be treated as having come into force on 9 March 2021.

(3) The Treasury may by regulations repeal paragraphs 4 to 11 of Schedule 19 (penalty) where they consider it appropriate to do so by reason of circumstances arising as a result of the emergency specified in article 2 of the Coronavirus Order 2020.

(4) Regulations made under subsection (3)—

(a) must make provision for the repayment of amounts paid in respect of penalties under Schedule 19, and

(b) may make other transitional provision.

(5) Regulations under this section are to be made by statutory instrument.

(6) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

Commencement Information

I4 S. 99(1) treated as having come into force at 9.3.2021 and s. 99(2)-(6) in force at Royal Assent, see. s. 99(2)

100 Refunds to S4C U.K.

(1) In section 33(3) of the Value Added Tax Act 1994 (refunds of VAT in certain cases), after paragraph (i) insert—

“(ia) S4C;”.

(2) The amendment made by this section has effect in relation to supplies made, and acquisitions and importations taking place, on or after 1 April 2021.