Eleventh Report of Session 2021–22 Contents


S.I. 2021/715

Value Added Tax (Amendment) (EU Exit) Regulations 2021

1.In its letter to HM Treasury of 27th October 2021, the Select Committee requested a memorandum on the following points:

1. Confirm that this instrument attracted the made affirmative procedure under section 51(5) of the Taxation (Cross-border Trade) Act 2018 (“TCTA”) because—

(a) it is an instrument that contains regulations under section 51 of the 2018 Act, and it amends an Act of Parliament (notwithstanding that the amending provisions, regulations 2 to 4, are not made under section 51); and

(b) the effect of regulation 43 is to amend the operation of section 16 of the Value Added Tax Act 1994 (as substituted by the 2018 Act), and consequently the operation of the Acts of Parliament listed in new regulations 133AB and 133AE (inserted by regulation 43).

Questions (2) to (4) relate to regulation 43—

2. Explain the intended difference in meaning between being subject to “prescribed adaptation(s)” (in new regulations 133AF, 133AG and 133AI), “adaptations” (in new regulations 133AE and 133AH) and “modifications” (in new regulation 133AJ, which is under the heading “Adaptations...”).

3. Given that new regulations 133AF and 133AH apply adaptations to Articles 89 and 110 of the Union Customs Code in the same circumstances, explain how the provisions are intended to interact, and why it was not possible to include all the adaptations in a single regulation.

4. Confirm that the references to “security” in new regulations 133AH and 133AI should have been references to “guarantee”, for consistency with both the provisions of EU legislation which those regulations adapt and new regulations 133AF and 133AG.

2.This memorandum has been prepared by Her Majesty’s Revenue and Customs on behalf of HM Treasury.

3.In relation to the first point, section 51(5) TCTA provides:

“A statutory instrument containing regulations under this section that amends or repeals any Act of Parliament must be laid before the House of Commons, and, unless approved by that House before the end of the period of 28 days beginning with the date on which the instrument is made, ceases to have effect at the end of that period”.

4.Section 51(8) TCTA provides:

“A statutory instrument containing regulations under this section to which subsection (5) does not apply is subject to annulment in pursuance of a resolution of the House of Commons.”

5.Regulations 2 to 4 are made under powers given by section 30(4) of the Value Added Tax Act 1994 (“VATA”). Section 97(5) of that Act provides that such regulations are subject to annulment in pursuance of a resolution of the House of Commons. Regulations 2 to 4 are, therefore, not within scope of section 51(5).

6.Regulation 43 does not amend or repeal an Act of Parliament and so, in the Department’s view, section 51(5) does not apply. There is nothing in section 51(5) to suggest that it applies where the operation of primary legislation is disapplied or modified, it only applies where the regulation amends or repeals an Act of Parliament. It is also noteworthy that section 16(3) VATA provides a power to provide for exceptions from the effect of section 16(1) or for that section to have effect with modifications specified in regulations. Such regulations would be subject to the negative procedure by virtue of section 97(5) VATA. Whilst it would have been possible to cite this power in making these Regulations the Department took the view that it was more appropriate to cite the power provided by section 51 in light of the wide variety of amendments made by the Regulations.

7.As section 51(5) is therefore not engaged in relation to either regulations 2 to 4 or 43 the Department takes the view that the correct parliamentary procedure for those regulations is the negative procedure by virtue of section 97(5) VATA and section 51(8) TCTA respectively.

8.Questions (2) and (4) relate to the use of consistency of language, specifically the terms “prescribed adaptation(s)”, “adaptions” and “modifications” in question (2) and “security” and “guarantee” in question (4). The Department accepts that the interchangeable use of terms, with the same intended meaning, could be liable to cause confusion. The Department will consider how this can best be clarified at the next suitable legislative opportunity.

9.Question (3) relates to the interaction of new regulations 133AF and 133AH. The adaptations made by new regulations 133AF and 133AH are not contrary and are intended to both be applied. Whilst the adaptations could have been contained in a single regulation, it was decided to keep them separate as new regulations 133AF and 133AH replicate regulations 121A and 121C of the Value Added Tax Regulations 1995 respectively for Northern Ireland. Replicating the old structure of the regulations was intended to assist the reader in understanding the changes made.

Her Majesty’s Revenue and Customs

2 November 2021

Published: 19 November 2021 Site information    Accessibility statement