At the Committee’s meeting on 17 November 2021, it scrutinised a number of instruments. It was agreed that the special attention of the House of Commons should be drawn to one of those considered in accordance with Standing Orders. The instrument and the grounds for reporting it is given below. The relevant departmental memorandum is published as an appendix to this report.
1.1The Committee draws the special attention of this House to these Regulations on the grounds that there is a doubt as to whether they are intra vires in one respect, that they require elucidation in one respect, and that they are defectively drafted in two respects.
1.2These Regulations, which were made by the negative resolution procedure, amend several pieces of legislation relating to Value Added Tax.
1.3The enabling powers cited in the preamble include both provisions of the Value Added Tax Act 1994 (“VATA”) and section 51 of the Taxation (Cross-border Trade) Act 2018 (“TCTA”). The latter provides for the made affirmative resolution procedure to apply to “a statutory instrument containing regulations under this section that amends or repeals any Act of Parliament”. Regulations 2 to 4 of this instrument amend the VATA. And regulation 43, although it does not directly change the words of any Act of Parliament, expressly changes the operation of section 16 VATA by specifying exceptions to its general rule about the enactments that apply in relation to VAT. The Committee asked Her Majesty’s Treasury to confirm that, consequently, this instrument attracted the made affirmative procedure under section 51(5) TCTA.
1.4In a memorandum printed as an Appendix, Her Majesty’s Revenue and Customs (replying on behalf of HM Treasury) explains in relation to the amendment made by regulation 43 that it does not consider section 51(5) TCTA to require the affirmative procedure where the operation of primary legislation is disapplied or modified, but only where primary legislation is amended or repealed. The Committee considers it wrong in principle that an instrument which makes significant changes to the application and effect of primary legislation should escape greater scrutiny merely by making those changes indirectly, by deeming provision, instead of changing the words of the Act. The Committee does not draw special attention to the point in this case, however, because the changes made by regulation 43 would have attracted the negative resolution procedure had they been made under section 16(3) VATA.
1.5In relation to regulations 2 to 4, the Department merely notes that they are made under the VATA and so do not fall within scope of section 51(5) TCTA. The Committee disagrees. Section 51(5) TCTA provides that the affirmative resolution procedure applies to a statutory instrument ... that amends or repeals any Act, not to a statutory instrument containing regulations under section 51 that amend or repeal any Act. This is a statutory instrument that amends an Act. And while the regulations which do so are not regulations under section 51, that is not the trigger for affirmative resolution. The Committee concedes that this apparent quirk may not have been the drafter’s intent, but it remains the fact that under section 51(5) TCTA as enacted by Parliament, any instrument which (a) contains regulations made under that section and (b) amends or repeals an Act of Parliament is subject to the made affirmative resolution procedure. The Committee accordingly reports these Regulations for doubt as to whether they are intra vires.
1.6The Committee noticed that new regulations 133AF and 133AH, inserted into the Value Added Tax Regulations 1995 (S.I. 1995/2518) by regulation 43, both apply adaptations to Articles 89 and 110 of the Union Customs Code in the same circumstances. It asked the Department to explain how the new provisions are intended to interact and why it was not possible to include all the adaptations in a single regulation. In its memorandum, the Department explains that the adaptations are intended to apply simultaneously, and that they were kept separate because replicating the old structure of regulations 121A and 121C of the 1995 Regulations was thought to be of more help to the reader in understanding the changes being made. The Committee accordingly reports regulation 43 (new regulations 133AF and 133AH) as requiring elucidation, provided in the Department’s memorandum.
1.7The Committee also asked the Department to explain inconsistencies in regulation 43, where the inserted regulations appear to use several terms interchangeably to mean the same thing: in one case the terms are “prescribed adaptation(s)”, “adaptations” and “modifications”; in the other, “security” and “guarantee”. In its memorandum, the Department accepts that such inconsistencies could cause confusion and undertakes to consider how best to ensure clarity at the next suitable legislative opportunity. The Committee accordingly reports regulation 43 for defective drafting in two respects, acknowledged by the Department.