The Value Added Tax (Consideration for Fuel Provided for Private Use) Order 2012

EXPLANATORY NOTE

(This note is not part of the Order)

This order amends section 57 of the Value Added Tax Act 1994 (c.23) (“the Act”). References to sections 56 and 57 are references to sections 56 and 57 of the Act.

VAT is payable if road fuel of a business is used for private motoring. Section 56 provides that where the fuel of a business is provided for private use it is to be treated as a taxable supply for consideration. Articles 16 and 74 of Council Directive 2006/112/EC (OJ L347/1 of 11.12.2006) ordinarily requires that, where a business’s goods are provided for the private use of the owner or staff, the value of that supply is determined by reference to the purchase price of the goods; however, the UK has been permitted to derogate from those Articles where a business’s fuel is used for private motoring (Council Decision 659/2006 EC of 25th September 2006 (OJ L272/15 of 3.10.2006)), so that a business may also value those supplies by using a flat rate which is dependent upon the vehicle’s CO₂ emissions rating. The derogation requires that the flat-rate amounts be adjusted annually to reflect changes in the average cost of fuel.

The flat-rate amounts determined with reference to the vehicle’s CO₂ emissions figure are set out in a table in section 57 (“Table A”). Where no emissions value is available, note (6) in section 57(3) attributes a CO₂ emissions figure to the vehicle according to its cylinder capacity for the purpose of applying Table A.

This order substitutes a new Table A. The new rates apply to prescribed accounting periods starting on or after 1st May 2012.

A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and relates to routine changes to rates to a predetermined indexation formula.