Finance Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
299

(b)
the services are to any extent effectively used and enjoyed
in a country which is not a member State,

the supply is to be treated to that extent as made in that country.
      (4)
Where—
(a)
a supply of services to which this paragraph applies would
5
otherwise be treated as made in a country which is not a
member State, and
(b)
the services are to any extent effectively used and enjoyed
in the United Kingdom,

the supply is to be treated to that extent as made in the United
10
Kingdom.
Part 2
Exceptions relating to supplies made to relevant business person
Electronically-supplied services
9     (1)
Where—
15
(a)
a supply of services consisting of the provision of
electronically supplied services to a relevant business
person would otherwise be treated as made in the United
Kingdom, and
(b)
the services are to any extent effectively used and enjoyed
20
in a country which is not a member State,

the supply is to be treated to that extent as made in that country.
      (2)
Where—
(a)
a supply of services consisting of the provision of
electronically supplied services to a relevant business
25
person would otherwise be treated as made in a country
which is not a member State, and
(b)
the services are to any extent effectively used and enjoyed
in the United Kingdom,

the supply is to be treated to that extent as made in the United
30
Kingdom.
      (3)
Examples of what are electronically supplied services for the
purposes of this Schedule include—
(a)
website supply, web-hosting and distance maintenance of
programmes and equipment,
35
(b)
the supply of software and the updating of software,
(c)
the supply of images, text and information, and the
making available of databases,
(d)
the supply of music, films and games (including games of
chance and gambling games),
40
(e)
the supply of political, cultural, artistic, sporting, scientific,
educational or entertainment broadcasts (including
broadcasts of events), and
(f)
the supply of distance teaching.
      (4)
But where the supplier of a service and the supplier’s customer
45
communicate via electronic mail, this does not of itself mean that

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
300

the service provided is an electronically supplied service for the
purposes of this Schedule.
Part 3
Exceptions relating to supplies not made to relevant business person
Intermediaries
5
10    (1)
A supply of services to which this paragraph applies is to be
treated as made in the same country as the supply to which it
relates.
      (2)
This paragraph applies to a supply to a person who is not a
relevant business person consisting of the making of
10
arrangements for a supply by or to another person or of any other
activity intended to facilitate the making of such a supply.
Transport of goods: general
11    (1)
A supply of services to a person who is not a relevant business
person consisting of the transportation of goods is to be treated as
15
made in the country in which the transportation takes place, and
(in a case where it takes place in more than one country) in
proportion to the distances covered in each.
      (2)
For the purposes of sub-paragraph (1) transportation which takes
place partly outside the territorial jurisdiction of a country is to be
20
treated as taking place wholly in the country if—
(a)
it takes place in the course of a journey between two points
in the country (whether or not as part of a longer journey
involving travel to or from another country), and
(b)
the means of transport used does not (except in an
25
emergency or involuntarily) stop, put in or land in another
country in the course of the journey between those two
points.
      (3)
This paragraph does not apply to a transportation of goods
beginning in one member State and ending in another (see
30
paragraph 12(2)).
Intra-Community transport of goods
12
A supply of services to a person who is not a relevant business
person consisting of the transportation of goods which begins in
one member State and ends in another is to be treated as made in
35
the member State in which the transportation begins.
Ancillary transport services
13    (1)
A supply to a person who is not a relevant business person of
ancillary transport services is to be treated as made where the
services are physically performed.
40
      (2)
“Ancillary transport services” means loading, unloading handling
and similar activities.

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 1 — Amendments coming into force in 2010
301

Valuation services etc
14
A supply to a person who is not a relevant business person of
services consisting of the valuation of, or carrying out of work on,
goods is to be treated as made where the services are physically
performed.
5
Electronic services
15
A supply consisting of the provision by a person who belongs in a
country which is not a member State (other than the Isle of Man)
of electronically supplied services (as to the meaning of which see
paragraph 9(3) and (4)) to a person (“the recipient”) who—
10
(a)
is not a relevant business person, and
(b)
belongs in a member State,

is to be treated as made in the country in which the recipient
belongs.
Other services provided to recipient belonging outside EC
15
16    (1)
A supply consisting of the provision to a person (“the recipient”)
who—
(a)
is not a relevant business person, and
(b)
belongs in a country which is not a member State (other
than the Isle of Man),
20

of services to which this paragraph applies is to be treated as made
in the country in which the recipient belongs.
      (2)
This paragraph applies to—
(a)
transfers and assignments of copyright, patents, licences,
trademarks and similar rights,
25
(b)
the acceptance of any obligation to refrain from pursuing
or exercising (in whole or in part) any business activity or
any rights within paragraph (a),
(c)
advertising services,
(d)
services of consultants, engineers, consultancy bureaux,
30
lawyers, accountants, and similar services, data processing
and provision of information, other than any services
relating to land,
(e)
banking, financial and insurance services (including
reinsurance), other than the provision of safe deposit
35
facilities,
(f)
the provision of access to, and of transport or transmission
through, natural gas and electricity distribution systems
and the provision of other directly linked services,
(g)
the supply of staff,
40
(h)
the letting on hire of goods other than means of transport,
(i)
telecommunication services (as to the meaning of which
see paragraph 8(2)),
(j)
radio and television broadcasting services, and
(k)
electronically supplied services (as to the meaning of
45
which see paragraph 9(3) and (4)).”

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 2 — Amendments coming into force in 2011
302

12
Omit Schedule 5 (services supplied where received).
13
In Article 5 of the Value Added Tax (Tour Operators) Order 1987 (S.I. 1987/
1806)—
(a)
omit paragraph (1), and
(b)
in paragraph (2) after “treated” insert “for the purposes of this Act”,
5

and treat that article as made under section 7A(6)(c) of VATA 1994 (inserted
by paragraph 4).
14    (1)
The powers contained in section 7A(6) of VATA 1994 (inserted by paragraph
4) may be exercised at any time on or after the day on which this Act is
passed.
10
      (2)
The amendments made by paragraph 7 come into force on 1 January 2010;
but the references in section 43 of VATA 1994 (as amended by that
paragraph) to a supply to which section 7A(2) of that Act applies includes a
supply of services falling within paragraphs 1 to 8 of Schedule 5 made before
that date.
15
      (3)
Subject to that, the amendments made by this Part have effect in relation to
supplies made on or after 1 January 2010.
Part 2
Amendments coming into force in 2011
Admission to cultural, educational and entertainment activities etc
20
15    (1)
Schedule 4A to VATA 1994 (inserted by paragraph 7) is amended as follows.
      (2)
Omit paragraph 4.
      (3)
After paragraph 9 insert—
“Admission to cultural, educational and entertainment activities etc
9A    (1)
A supply to a relevant business person of services to which this
25
paragraph applies is to be treated as made in the country in which
the events in question actually take place.
      (2)
This paragraph applies to the provision of—
(a)
services in respect of admission to cultural, artistic,
sporting, scientific, educational, entertainment or similar
30
events (including fairs and exhibitions), and
(b)
ancillary services relating to admission to such events.”
      (4)
After paragraph 14 insert—
“Cultural, educational and entertainment services etc
14A   (1)
A supply to a person who is not a relevant business person of
35
services to which this paragraph applies is to be treated as made
in the country in which the activities concerned actually take
place.
      (2)
This paragraph applies to the provision of—

Finance Bill
Schedule 36 — VAT: place of supply of services etc
Part 4 — Transitional provisions
303

(a)
services relating to cultural, artistic, sporting, scientific,
educational, entertainment or similar activities (including
fairs and exhibitions), and
(b)
ancillary services relating to such activities, including
services of organisers of such activities.”
5
16
The amendments made by this Part have effect in relation to supplies made
on or after 1 January 2011.
Part 3
Amendments coming into force in 2013
17
In Schedule 4A to VATA 1994 (inserted by paragraph 7), after paragraph 13
10
insert—
“Long-term hiring of means of transport
13A   (1)
A supply to a person who is not a relevant business person (“the
recipient”) of services consisting of the long-term hiring of a
means of transport is to be treated as made in the country in which
15
the recipient belongs.

But this is subject to sub-paragraph (2) and paragraph 3(3) and (4).
      (2)
A supply to a person who is not a relevant business person (“the
recipient”) of services consisting of the long-term hiring of a
pleasure boat which is actually put at the disposal of the recipient
20
at the supplier’s business establishment, or some other fixed
establishment of the supplier, is to be treated as made in the
country where the pleasure boat is actually put at the disposal of
the recipient.
      (3)
For the purposes of this Schedule, the hiring of a means of
25
transport is “long-term” if it is not short-term (as to the meaning of
which see paragraph 3(2)).”
18
The amendment made by this Part has effect in relation to supplies made on
or after 1 January 2013.
Part 4
30
Transitional provisions
19    (1)
This paragraph applies where—
(a)
amendments made by this Schedule provide for a supply of services
to be treated as made in the United Kingdom,
(b)
the supply would not have fallen to be so treated apart from the
35
amendments, and
(c)
the services are treated under the law of a member State other than
the United Kingdom as supplied in that member State before the
commencement date.
      (2)
The supply is not to be treated as made in the United Kingdom.
40

Finance Bill
Schedule 37 — Stock lending: stamp taxes in the event of insolvency
Part 1 — Stamp duty
304

      (3)
“The commencement date” means the date specified by this Schedule as that
on or after which a supply must be made if it is to be treated as made in the
United Kingdom by virtue of the amendments.
Schedule 37
Section 82

Stock lending: stamp taxes in the event of insolvency
5
Part 1
Stamp duty
1
FA 1986 is amended as follows.
2
In Part 3 (stamp duty), after section 80C insert—
“80D
Repurchases and stock lending: replacement stock on insolvency
10
(1)
This section applies where—
(a)
A and B have entered into an arrangement falling within
section 80C(1),
(b)
the conditions in subsection (2A) or (3) of that section are met,
(c)
stock is transferred to A or A’s nominee, and
15
(d)
the conditions in subsection (2) below are met.
(2)
The conditions in this subsection are that—
(a)
A and B are not connected persons within the meaning of
section 839 of the Taxes Act 1988,
(b)
after B has transferred stock under the arrangement, A or B
20
becomes insolvent,
(c)
it becomes apparent (whether before or after the insolvency
occurs) that, as a result of the insolvency, stock will not be
transferred to B or B’s nominee in accordance with the
arrangement,
25
(d)
the party who does not become insolvent (“the solvent
party”) or the solvent party’s nominee acquires replacement
stock, and
(e)
the replacement stock is acquired before the end of the period
of 30 days beginning with the day on which the insolvency
30
occurs (“the insolvency date”).
(3)
Where collateral is provided under the arrangement (or under
arrangements of which that arrangement forms part), stamp duty is
not chargeable on any instrument transferring to the solvent party or
the solvent party’s nominee—
35
(a)
replacement stock acquired using the collateral (whether
directly or indirectly), or
(b)
where the solvent party uses the whole of the value of the
collateral to acquire replacement stock, any further
replacement stock.
40
(4)
Where no collateral is provided as mentioned in subsection (3),
stamp duty is not chargeable on any instrument transferring

Finance Bill
Schedule 37 — Stock lending: stamp taxes in the event of insolvency
Part 1 — Stamp duty
305

replacement stock to the solvent party or the solvent party’s
nominee.
(5)
Subsections (3) and (4) may apply as regards more than one
instrument (and where those subsections apply as regards more than
one instrument, the instruments may be executed by different
5
persons).
(6)
But those subsections apply only as regards replacement stock up to
the amount of stock which will not be transferred as a result of the
insolvency.
(7)
An instrument on which stamp duty is not chargeable by virtue only
10
of subsection (3) or (4) is not to be deemed to be duly stamped unless
it has been stamped with a stamp denoting that it is not chargeable
with any duty.
(8)
Despite section 122(1) of the Stamp Act 1891, the stamp mentioned in
subsection (7) may be a stamp of such kind as the Commissioners for
15
Her Majesty’s Revenue and Customs may prescribe.
(9)
For the purposes of this section, a person becomes insolvent—
(a)
if a company voluntary arrangement takes effect under Part
1 of the Insolvency Act 1986,
(b)
if an administration application (within the meaning of
20
Schedule B1 to that Act) is made or a receiver or manager, or
an administrative receiver, is appointed,
(c)
on the commencement of a creditor’s voluntary winding up
(within the meaning of Part 4 of that Act) or a winding up by
the court under Chapter 6 of that Part,
25
(d)
if an individual voluntary arrangement takes effect under
Part 8 of that Act,
(e)
on the presentation of a bankruptcy petition (within the
meaning of Part 9 of that Act),
(f)
if a compromise or arrangement takes effect under Part 26 of
30
the Companies Act 2006,
(g)
if a bank insolvency order takes effect under Part 2 of the
Banking Act 2009,
(h)
if a bank administration order takes effect under Part 3 of that
Act, or
35
(i)
on the occurrence of any corresponding event which has
effect under or as a result of the law of Scotland or Northern
Ireland or a country or territory outside the United Kingdom.
(10)
In this section—
“collateral” means an amount of money or other property
40
which is payable to or made available for the benefit of a
party to an arrangement or that party’s nominee for the
purpose of securing the discharge of the requirement to
transfer stock to that party or the nominee;
“replacement stock”, in the event of a party to an arrangement
45
becoming insolvent, is stock of the same kind as the stock
which will not be transferred to the other party or that party’s
nominee as a result of the insolvency.”