Finance Bill

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Value added tax
1

A
Bill
To
Grant certain duties, to alter other duties, and to amend the law relating to the
National Debt and the Public Revenue, and to make further provision in
connection with finance.
Most Gracious Sovereign
WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the
United Kingdom in Parliament assembled, towards raising the necessary
supplies to defray Your Majesty’s public expenses, and making an addition to the
public revenue, have freely and voluntarily resolved to give and to grant unto Your
Majesty the several duties hereinafter mentioned; and do therefore most humbly
beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most
Excellent Majesty, by and with the advice and consent of the Lords Spiritual and
Temporal, and Commons, in this present Parliament assembled, and by the authority
of the same, as follows:—
Part 1
Value added tax
1
Goods subject to warehousing regime: place of acquisition or supply
In section 18 of VATA 1994 (goods subject to warehousing regime: place and
time of acquisition or supply), after subsection (1) insert—
5
“(1A)
The Commissioners may by regulations prescribe circumstances in
which subsection (1) above shall not apply.”
2
Cars: determination of consideration for fuel supplied for private use
(1)
Section 57 of VATA 1994 (determination of consideration for fuel supplied for
private use) is amended as follows.
10
(2)
After subsection (4) (power of Treasury by order to substitute a different Table

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Finance Bill
Part 1 — Value added tax
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for Table A) insert—
“(4A)
The power conferred by subsection (4) above includes power to
substitute for Table A a Table (whether or not of the same or a similar
configuration) where any description of vehicle may be by reference to
any one or more of the following—
5
(a)
the CO2 emissions figure for the vehicle;
(b)
the type or types of fuel or power by which the vehicle is, or is
capable of being, propelled;
(c)
the cylinder capacity of the engine in cubic centimetres.
(4B)
The provision that may be included in any such Table includes
10
provision for the purpose of enabling the consideration to be
determined by reference to the Table—
(a)
by applying a percentage specified in the Table to a monetary
amount specified in the Table, or
(b)
by any other method.
15
(4C)
Table A, as from time to time substituted by virtue of subsection (4A)
above, may be implemented or supplemented by either or both of the
following—
(a)
provision in Rules inserted before the Table, prescribing how
the consideration is to be determined by reference to the Table;
20
(b)
provision in Notes inserted after the Table in accordance with
the following provisions of this section.
(4D)
The provision that may be made in Notes includes provision—
(a)
with respect to the interpretation or application of the Table or
any Rules or Notes;
25
(b)
with respect to the figure that is to be regarded as the CO2
emissions figure for any vehicle or any particular description of
vehicle;
(c)
for treating a vehicle as a vehicle with a particular CO2
emissions figure;
30
(d)
for treating a vehicle with a CO2 emissions figure as a vehicle
with a different CO2 emissions figure;
(e)
for or in connection with determining the consideration
appropriate to vehicles of any particular description (in
particular, vehicles falling within any one or more of the
35
descriptions in subsection (4E) below).
(4E)
The descriptions are—
(a)
vehicles capable of being propelled by any particular type or
types of fuel or power;
(b)
vehicles first registered before 1st January 1998;
40
(c)
vehicles first registered on or after that date which satisfy the
condition in subsection (4F) below (registration without a CO2
emissions figure).
(4F)
The condition is that the vehicle is not one which, when it is first
registered, is so registered on the basis of—
45
(a)
an EC certificate of conformity that specifies a CO2 emissions
figure, or
(b)
a UK approval certificate that specifies such a figure.

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Part 1 — Value added tax
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(4G)
Any Rules or Notes do not form part of the Table, but the Treasury, by
order taking effect from the beginning of any prescribed accounting
period beginning after the order is made, may—
(a)
insert Rules or Notes,
(b)
vary or remove Rules or Notes, or
5
(c)
substitute any or all Rules or Notes.”.
(3)
In subsection (5) (fuel supplied for 2 or more vehicles)—
(a)
in paragraph (a), for “Table A above, that Table” substitute “Table A
above or any Notes, that Table and those Notes”;
(b)
in paragraph (b), after “that Table”, in both places, insert “or those
10
Notes”.
(4)
In subsection (7) (cubic capacity of internal combustion engine with
reciprocating pistons) after “for the purposes of Table A above” insert “and any
Notes”.
(5)
In subsection (8) (cubic capacity in other cases) after “for the purposes of Table
15
A above” insert “and any Notes”.
(6)
After subsection (8) insert—
“(9)
In this section—
“CO2 emissions figure” means a CO2 emissions figure expressed
in grams per kilometre driven;
20
“EC certificate of conformity” means a certificate of conformity
issued by a manufacturer under any provision of the law of a
Member State implementing Article 6 of Council Directive 70/
156/EEC, as from time to time amended;
“Notes” means Notes inserted by virtue of subsection (4C)(b)
25
above;
“Rules” means Rules inserted by virtue of subsection (4C)(a)
above;
“UK approval certificate” means a certificate issued under—
(a)
section 58(1) or (4) of the Road Traffic Act 1988, or
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(b)
Article 31A(4) or (5) of the Road Traffic (Northern
Ireland) Order 1981.
(10)
If the Treasury consider it necessary or expedient to do so in
consequence of—
(a)
the form or content of any Table substituted or to be substituted
35
by virtue of subsection (4A) above, or
(b)
any provision included or to be included in Rules or Notes,

they may by order amend, repeal or replace so much of this section as
for the time being follows subsection (1) and precedes Table A and
relates to the use of that Table.”.
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(7)
The amendments made by this section come into force on such day or days as
the Treasury may appoint by order made by statutory instrument; and
different days may be so appointed for different purposes.
3
Credit for, or repayment of, overstated or overpaid VAT
(1)
Section 80 of VATA 1994 (recovery of overpaid VAT) is amended as follows.
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Finance Bill
Part 1 — Value added tax
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(2)
For subsection (1) (liability of Commissioners to repay overpaid VAT)
substitute—
“(1)
Where a person—
(a)
has accounted to the Commissioners for VAT for a prescribed
accounting period (whenever ended), and
5
(b)
in doing so, has brought into account as output tax an amount
that was not output tax due,

the Commissioners shall be liable to credit the person with that
amount.
(1A)
Where the Commissioners—
10
(a)
have assessed a person to VAT for a prescribed accounting
period (whenever ended), and
(b)
in doing so, have brought into account as output tax an amount
that was not output tax due,

they shall be liable to credit the person with that amount.
15
(1B)
Where a person has for a prescribed accounting period (whenever
ended) paid to the Commissioners an amount by way of VAT that was
not VAT due to them, otherwise than as a result of—
(a)
an amount that was not output tax due being brought into
account as output tax, or
20
(b)
an amount of input tax allowable under section 26 not being
brought into account,

the Commissioners shall be liable to repay to that person the amount so
paid.”.
(3)
In subsection (2) (Commissioners only liable to repay an amount on a claim)
25
before “repay” insert “credit or”.
(4)
After subsection (2) insert—
“(2A)
Where—
(a)
as a result of a claim under this section by virtue of subsection
(1) or (1A) above an amount falls to be credited to a person, and
30
(b)
after setting any sums against it under or by virtue of this Act,
some or all of that amount remains to his credit,

the Commissioners shall be liable to pay (or repay) to him so much of
that amount as so remains.”.
(5)
In subsection (3) (defence of unjust enrichment) for “under this section, that
35
repayment” substitute “under this section by virtue of subsection (1) or (1A)
above, that the crediting”.
(6)
For subsection (3A) (cost of payment borne for practical purposes by third
party) substitute—
“(3A)
Subsection (3B) below applies for the purposes of subsection (3) above
40
where—
(a)
an amount would (apart from subsection (3) above) fall to be
credited under subsection (1) or (1A) above to any person (“the
taxpayer”), and
(b)
the whole or a part of the amount brought into account as
45
mentioned in paragraph (b) of that subsection has, for practical
purposes, been borne by a person other than the taxpayer.”.

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(7)
In subsection (3B) (loss or damage to be disregarded) in paragraph (a), for
“repayment” substitute “crediting”.
(8)
For subsection (4) (time limit on claims) substitute—
“(4)
The Commissioners shall not be liable on a claim under this section—
(a)
to credit an amount to a person under subsection (1) or (1A)
5
above, or
(b)
to repay an amount to a person under subsection (1B) above,

if the claim is made more than 3 years after the relevant date.
(4ZA)
The relevant date is—
(a)
in the case of a claim by virtue of subsection (1) above, the end
10
of the prescribed accounting period mentioned in that
subsection, unless paragraph (b) below applies;
(b)
in the case of a claim by virtue of subsection (1) above in respect
of an erroneous voluntary disclosure, the end of the prescribed
accounting period in which the disclosure was made;
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(c)
in the case of a claim by virtue of subsection (1A) above in
respect of an assessment issued on the basis of an erroneous
voluntary disclosure, the end of the prescribed accounting
period in which the disclosure was made;
(d)
in the case of a claim by virtue of subsection (1A) above in any
20
other case, the end of the prescribed accounting period in which
the assessment was made;
(e)
in the case of a claim by virtue of subsection (1B) above, the date
on which the payment was made.

In the case of a person who has ceased to be registered under this Act,
25
any reference in paragraphs (b) to (d) above to a prescribed accounting
period includes a reference to a period that would have been a
prescribed accounting period had the person continued to be registered
under this Act.
(4ZB)
For the purposes of this section the cases where there is an erroneous
30
voluntary disclosure are those cases where—
(a)
a person discloses to the Commissioners that he has not brought
into account for a prescribed accounting period (whenever
ended) an amount of output tax due for the period;
(b)
the disclosure is made in a later prescribed accounting period
35
(whenever ended); and
(c)
some or all of the amount is not output tax due.”.
(9)
For subsections (4A) and (4B) (recovery of excess repayments) substitute—
“(4A)
Where—
(a)
an amount has been credited under subsection (1) or (1A) above
40
to any person at any time on or after 26th May 2005, and
(b)
the amount so credited exceeded the amount which the
Commissioners were liable at that time to credit to that person,

the Commissioners may, to the best of their judgement, assess the
excess credited to that person and notify it to him.”.
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(10)
For subsection (7) (no other liability of Commissioners to repay VAT not due)

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substitute—
“(7)
Except as provided by this section, the Commissioners shall not be
liable to credit or repay any amount accounted for or paid to them by
way of VAT that was not VAT due to them.”.
(11)
The side-note to the section accordingly becomes “Credit for, or repayment of,
5
overstated or overpaid VAT”.
(12)
Section 4 contains consequential and supplementary provision.
4
Section 3: consequential and supplementary provision
(1)
In consequence of the amendments made by section 3, VATA 1994 is amended
as follows.
10
(2)
In section 78 (interest in certain cases of official error) in subsection (1)(a)
(overstated output tax) for “and which they are in consequence liable to repay
to him” substitute “and, as a result, they are liable under section 80(2A) to pay
(or repay) an amount to him,”.
(3)
In section 80A (arrangements for reimbursing customers)—
15
(a)
in subsection (2)(a), for “repayment” substitute “crediting”;
(b)
in subsection (2)(b), for “the cost of the original payment of that amount
to the Commissioners” substitute “the amount brought into account as
mentioned in paragraph (b) of subsection (1) or (1A) of that section”;
(c)
in subsection (3)(a), for “repayment” substitute “crediting of the
20
amount”;
(d)
for subsection (3)(b) substitute—
“(b)
provision for cases where an amount is credited but an
equal amount is not reimbursed in accordance with the
arrangements;”;
25
(e)
in subsection (3)(c), for “repaid” substitute “paid (or repaid)”;
(f)
in subsection (4)(a), for “to make the repayments to the Commissioners
that they are required to make” substitute “to make the repayments, or
give the notifications, to the Commissioners that they are required to
make or give”;
30
(g)
in subsection (7)—
(i)
for “repayment”, in the first place, substitute “credit”;
(ii)
for “the making of any repayment” substitute “the crediting of
any amount”.
(4)
In section 80B (assessment of amounts due under section 80 arrangements)
35
after subsection (1) (person liable to pay an amount) insert—
“(1A)
Where—
(a)
an amount (“the gross credit”) has been credited to any person
under subsection (1) or (1A) of section 80,
(b)
any sums were set against that amount, in accordance with
40
subsection (2A) of that section, and
(c)
the amount reimbursed in accordance with the reimbursement
arrangements was less than the gross credit,

subsection (1B) below applies.
(1B)
In any such case—
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(a)
the person shall cease to be entitled to so much of the gross
credit as exceeds the amount so reimbursed, and
(b)
the Commissioners may, to the best of their judgement, assess
the amount due from that person and notify it to him,

but an amount shall not be assessed under this subsection to the extent
5
that the person is liable to pay it to the Commissioners as mentioned in
subsection (1) above.
(1C)
In determining the amount that a person is liable to pay as mentioned
in subsection (1) above, any amount reimbursed in accordance with the
reimbursement arrangements shall be regarded as first reducing so far
10
as possible the amount that he would have been liable so to pay, but for
the reimbursement of that amount.
(1D)
For the purposes of this section, nil is an amount.
(1E)
Any reference in any other provision of this Act to an assessment under
subsection (1) above includes, if the context so admits, a reference to an
15
assessment under subsection (1B) above.”.
(5)
In section 83 (appeals)—
(a)
in paragraph (t) (repayment of amounts under section 80 etc) before
“repayment” insert “crediting or”;
(b)
in paragraph (ta) (assessments under section 80B(1) etc) after “80B(1)”
20
insert “or (1B)”.
(6)
The amendments made by section 3 and this section have effect in any case
where a claim under section 80(2) of VATA 1994 is made on or after 26th May
2005, whenever the event occurred in respect of which the claim is made.
5
Reverse charge: gas and electricity valuation
25
(1)
In paragraph 8 of Schedule 6 to VATA 1994 (valuation in case of reverse
charge)—
(a)
after “8” insert “, or any supply of goods is treated by virtue of section
9A,”, and
(b)
after “the services” insert “or goods”.
30
(2)
This section has effect in relation to supplies made on or after 17th March 2005.
6
Disclosure of value added tax avoidance schemes
(1)
Schedule 1 (which contains amendments of Schedule 11A to VATA 1994) has
effect.
(2)
Subsection (1) and Schedule 1 shall come into force on such day as the Treasury
35
may by order made by statutory instrument appoint.
(3)
An order under subsection (2) may—
(a)
appoint different days for different purposes, and
(b)
contain transitional provisions and savings.