The Value Added Tax (Miscellaneous Amendments and Repeals) (EU Exit) Regulations 2021

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 1st July 2021, make appropriate provision relating to value added tax in consequence of, or otherwise in connection with, the withdrawal of the United Kingdom from the EU, including such provision as might be made by Act of Parliament.

M1 These Regulations amend provisions of the Value Added Tax Act 1994 (c. 23) (“VATA”) to ensure that the Protocol on Ireland/Northern Ireland agreed between the EU and the United Kingdom as part of the Withdrawal Agreement dated 19th October 2019 is correctly implemented into domestic law. They make amendments to VATA to remove the inadvertent extension of a zero rate and to ensure that movements from Northern Ireland to Great Britain are correctly treated to remove both the risk of double taxation and the risk that goods may be untaxed. They make miscellaneous textual amendments to correct minor errors in VATA. They also repeal legislation which is redundant following a change of policy between exit day and the end of the transition period (in relation to the entry of goods into the United Kingdom in a postal packet).

Regulation 3 amends Group 8 of Schedule 8 to VATA (zero rating: transport) by substituting Item 5 and inserting new words into Item 11 with the effect that the zero rate does not apply to transport-related services which are part of a wholly domestic supply.

Regulation 4 inserts a new paragraph 31B into Schedule 9ZB to VATA (“Schedule 9ZB”), with the effect that the removal by a taxable person of its own goods from Great Britain to Northern Ireland for non-business purposes is treated as a zero-rated taxable supply if certain conditions are met. This includes that before the removal the goods were supplied to, or imported by, the person who removed them and the removal takes place within 12 months of the person becoming liable to the VAT on the supply.

Regulations 5 and 6 amend Schedules 9ZB and 9ZC to VATA in connection with supplies of goods from the EU to Great Britain via Northern Ireland.

Regulation 5(3) amends paragraph 6 of Schedule 9ZB so that the relief from VAT applicable to a removal of qualifying goods from Northern Ireland to Great Britain does not apply to a removal of goods to which new paragraph 6(3A) (“paragraph 6(3A)”) inserted by regulation 5(3)(b) applies. Paragraph 6(3A) applies to a removal of goods in the course of a supply where those goods are qualifying Northern Ireland goods as a result of having been removed from a member State to Northern Ireland in the course of the same supply.

Regulation 5(2) amends paragraph 4 of Schedule 9ZB to provide that where paragraph 6(3A) applies to a removal of goods, the person who supplies them is the person who is treated as having imported them.

Regulation 5(4) inserts a new Part 7 into Schedule 9ZB, which applies, with certain modifications, the provisions of Part 3 of Schedule 9ZC to VATA (liability to be registered of persons treated as having imported goods under Part 1 of that Schedule) to persons who are treated as having imported goods pursuant to paragraph 4(3A) of Schedule 9ZB.

Regulation 6 amends paragraph 1 of Schedule 9ZC to VATA so that the references to importation in sections 5A(3), 7(5B)(b) and 7AA(1)(c) of VATA include removals to which paragraph 6(3A) applies.

Regulations 7 and 8 amend Schedules 9ZA and 9ZB to VATA to correct minor errors which do not obscure the legislative intent, but which ought to be corrected to avoid misleading readers.

Regulation 9 omits section 16A from VATA. Section 16A was inserted into VATA by paragraph 14 of Schedule 8 to the Taxation (Cross-border Trade) Act 2018 (c. 22) (“TCTA”). Regulation 10 omits paragraph 14 from Schedule 8 to TCTA, which is spent as a result of regulation 9. The power in section 16A was exercised to make the Value Added Tax (Postal Packets and Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1376) and regulation 8 of the Value Added Tax (Miscellaneous Amendments, Revocation and Transitional Provisions) (EU Exit) Regulations 2019 (S.I. 2019/513) which amended S.I. 2018/1376. These provisions were revoked by the Value Added Tax (Miscellaneous and Transitional Provisions, Amendment and Revocation) (EU Exit) Regulations 2020 (S.I. 2020/1495) before being fully brought into force.

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.