These Regulations implement, in part, the requirements of the Act concerning the conditions of Accession of the Republic of Bulgaria and Romania and the adjustments to the Treaties on which the European Union is founded, signed at Luxembourg on 25th April 20058(“the Act of Accession”), so far as they relate to VAT.

Regulation 3 amends the definition of “alphabetical code” in regulation 2(1) of the principal Regulations to take account of the accession to the European Union of Romania and Bulgaria. The use of the alphabetical code is required by Article 22(1)(d) of Council Directive 77/388/EEC9 (“the Sixth Directive”).

Regulation 4 updates existing references in the principal Regulations to Council Regulation (EEC) No. 2913/9210 (the Community Customs Code) and Commission Regulation (EEC) No. 2454/9311 (which contains provisions implementing the Community Customs Code) (“the Implementing Regulation”) as a consequence of modifications made to those instruments by the Act of Accession and by Council Regulation (EC) No. 1791/200612. The Act of Accession provides that the Community Customs Code and the Implementing Regulation will apply to Bulgaria and Romania subject to certain modifications contained in the Act of Accession (see chapter 4 of Annex V to the Act of Accession). Council Regulation (EC) No. 1791/2006 amends the Community Customs Code to bring Romania and Bulgaria within the customs territory of the Community (see article 1 of, and chapter 12 of the Annex to, the Regulation).

Regulation 5 amends regulation 138 of the principal Regulations. Regulation 138 implements Article 28p of the Sixth Directive13. Article 28p introduced transitional arrangements for the taxation of goods from Austria, Finland and Sweden when they joined the European Union in 1995 and was subsequently amended to include transitional arrangements for the 10 member States to join the European Union in 2004. Council Directive 2006/98/EC adapting certain Directives in the field of taxation, by reason of the Accession of Bulgaria and Romania14 amends Article 28(p) to provide transitional arrangements for Bulgaria and Romania. The effect of the amended regulation 138 is to treat certain goods as if they were imported into the United Kingdom. Subject to the exceptions in paragraph (4) of the regulation such goods are those supplied, in the course of a tax free export, in Bulgaria or Romania before the 1st January 2007 and which arrive in the United Kingdom on or after that date, or those goods which are removed on or after 1st January 2007 from specified customs arrangements or procedures under which they were placed before that date.