Value Added Tax Act 1994

• (d) where that person is a company registered under the Companies Act 2006 in England and Wales or Scotland or an unregistered company as defined in section 220 of the Insolvency Act 1986 which is deemed to be registered in England and Wales or Scotland under section 221 of that Act, a petition has been presented to the court which has resulted in a winding-up order being made under Chapter 6 of Part 4 or Part 5 of the Insolvency Act 1986 in relation to that person and that person has not been dissolved or that winding-up order has not been stayed or sisted,

• (e) where that person is a company registered under the Companies Act 2006 in Northern Ireland, or an unregistered company as defined in article 184 of the Insolvency (Northern Ireland) Order 1989 which is deemed to be registered in Northern Ireland under article 185 of that Order, a petition has been presented to the court which has resulted in a winding-up order being made under Part 5 or Part 6 of the Insolvency (Northern Ireland) Order 1989 and that person has not been dissolved or that winding-up order has not been stayed,

• (f) that person is in administration for the purposes of Schedule B1 to the Insolvency Act 1986 or Schedule B1 to the Insolvency (Northern Ireland) Order 1989,

• (g) an appointment of an administrative receiver is in force in relation to that person disregarding any temporary vacancy in the office of receiver,

• (h) an appointment of a liquidator is in force as a consequence of a creditors’ voluntary winding up under Chapter 4 of Part 4 of the Insolvency Act 1986 or Chapter 4 of Part 5 of the Insolvency (Northern Ireland) Order 1989 in relation to that person disregarding any temporary vacancy in the office of liquidator,

• (i) a voluntary arrangement has been approved in accordance with Part 1 or Part 8 of the Insolvency Act 1986 or Part 2 or Chapter 2 of Part 8 of the Insolvency (Northern Ireland) Order 1989 in relation to that person and that voluntary arrangement has not come to an end prematurely,

• (j) a county court administration order has been made under Part 6 of the County Courts Act 1984 or Part 6 of the Judgments Enforcement (Northern Ireland) Order 1981 in relation to that person and has not ceased to take effect,

• (k) a compromise or arrangement sanctioned by the court and delivered to the registrar in accordance with section 899 of the Companies Act 2006 is in place in relation to that person,

• (ka) a compromise or arrangement sanctioned by the court and delivered to the registrar or (as the case may be) published in the Gazette in accordance with section 901F of the Companies Act 2006 is in place in relation to that person,

• (l) that person’s estate is vested in any other person as that person’s trustee under a trust deed and that trust deed has become a protected trust deed,

• (m) that person has died and an insolvency administration order has been made which has not been discharged in respect of that person’s estate in accordance with an order under section 421 of the Insolvency Act 1986 or article 365 of the Insolvency (Northern Ireland) Order 1989 or that person’s estate has been sequestrated under section 22 of the Bankruptcy (Scotland) Act 2016 and the award of sequestration has not been recalled,

• (n) a voluntary arrangement has been approved in accordance with Part 1 of the Insolvency Act 1986 as applied by Part 2 of the Insolvent Partnerships Order 1994 or Part 2 of the Insolvency (Northern Ireland) Order 1989 as applied by Part 2 of the Insolvent Partnerships Order (Northern Ireland) 1995 in relation to that person and that voluntary arrangement has not come to an end prematurely,

• (o) an appointment of a liquidator is in force as a consequence of a creditors’ voluntary winding up under Chapter 4 of Part 4 of the Insolvency Act 1986 as applied by Parts 4 and 5 of the Insolvent Partnerships Order 1994, or Chapter 4 of Part 5 of the Insolvency (Northern Ireland) Order 1989 as applied by Part 4 of the Insolvent Partnerships Order (Northern Ireland) 1995 in relation to that person disregarding any temporary vacancy in the office of liquidator,

• (p) that person is in administration for the purposes of Schedule B1 to the Insolvency Act 1986 as applied by Part 3 of the Insolvent Partnerships Order 1994 or Schedule B1 to the Insolvency (Northern Ireland) Order 1989 as applied by Part 3 of the Insolvent Partnerships Order (Northern Ireland) 1995,

• (q) a voluntary arrangement has been approved in accordance with Part 1 of the Insolvency Act 1986 as applied by Part 4 of the Limited Liability Partnerships Regulations 2001 or Part 2 of the Insolvency (Northern Ireland) Order 1989 as applied by Part 4 of the Limited Liability Partnerships Regulations (Northern Ireland) 2004 in relation to that person and that voluntary arrangement has not come to an end prematurely,

• (r) an appointment of a liquidator is in force as a consequence of a creditors’ voluntary winding up under Chapter 4 of Part 4 of the Insolvency Act 1986 as applied by Part 4 of the Limited Liability Partnerships Regulations 2001 or Chapter 4 of Part 5 of the Insolvency (Northern Ireland) Order 1989 as applied by Part 4 of the Limited Liability Partnerships Regulations (Northern Ireland) 2004 in relation to that person disregarding any temporary vacancy in the office of liquidator,

• (s) that person is in administration for the purposes of Schedule B1 to the Insolvency Act 1986 as applied by Part 4 of the Limited Liability Partnerships Regulations 2001 or Schedule B1 to the Insolvency (Northern Ireland) Order 1989 as applied by Part 4 of the Limited Liability Partnerships Regulations (Northern Ireland) 2004.

• (9) In this section—

• “administrative receiver” means an administrative receiver within the meaning of section 251 of the Insolvency Act 1986 or article 5(1) of the Insolvency (Northern Ireland) Order 1989;

• “protected trust deed” has the same meaning as in the Bankruptcy (Scotland) Act 2016;

• “tax advantage” has the same meaning as in Schedule 11A; and

• “trust deed” has the same meaning as in the Bankruptcy (Scotland) Act 2016.

• (10) In this section a voluntary arrangement comes to an end prematurely if it would be regarded as having come to an end prematurely under—

• (a) section 7B or section 262C of the Insolvency Act 1986; or

• (b) article 20B or article 236C of the Insolvency (Northern Ireland) Order 1989.

• (11) Section 6 applies for determining the time when a supply is to be treated as taking place for the purposes of construing this section.

Adjustment of output tax in respect of supplies under section 55A

26AB

• (1) This section applies if—

• (a) a person is, as a result of section 26A, taken not to have been entitled to any credit for input tax in respect of any supply, and

• (b) the supply is one in respect of which the person is required under section 55A(6) to account for and pay VAT.

• (2) The person is entitled to make an adjustment to the amount of VAT which he is so required to account for and pay.

• (3) The amount of the adjustment is to be equal to the amount of the credit for the input tax to which the person is taken not to be entitled.

• (4) Regulations may make such supplementary, incidental, consequential or transitional provisions as appear to the Commissioners to be necessary or expedient for the purposes of this section.

• (5) Regulations under this section may in particular—

• (a) make provision for the manner in which, and the period for which, the adjustment is to be given effect,

• (b) require the adjustment to be evidenced and quantified by reference to such records and other documents as may be specified by or under the regulations,

• (c) require the person entitled to the adjustment to keep, for such period and in such form and manner as may be so specified, those records and documents,

• (d) make provision for readjustments if any credit for input tax is restored under section 26A.

• (6) Regulations under this section may make different provision for different circumstances.

Flat-rate scheme

26B

• (1) The Commissioners may by regulations make provision under which, where a taxable person so elects, the amount of his liability to VAT in respect of his relevant supplies in any prescribed accounting period shall be the appropriate percentage of his relevant turnover for that period.

A person whose liability to VAT is to any extent determined as mentioned above is referred to in this section as participating in the flat-rate scheme.

• (2) For the purposes of this section—

• (a) a person’s “relevant supplies” are all supplies made by him except supplies made at such times or of such descriptions as may be specified in the regulations;

• (b) the “appropriate percentage” is the percentage so specified for the category of business carried on by the person in question;

• (c) a person’s “relevant turnover” is the total of—

• (i) the value of those of his relevant supplies that are taxable supplies, together with the VAT chargeable on them, and

• (ii) the value of those of his relevant supplies that are exempt supplies.

• (3) The regulations may designate certain categories of business as categories in relation to which the references in subsection (1) above to liability to VAT are to be read as references to entitlement to credit for VAT.

• (4) The regulations may provide for persons to be eligible to participate in the flat-rate scheme only in such cases and subject to such conditions and exceptions as may be specified in, or determined by or under, the regulations.

• (5) Subject to such exceptions as the regulations may provide for, a participant in the flat-rate scheme shall not be entitled to credit for input tax.

This is without prejudice to subsection (3) above.

• (6) The regulations may—

• (a) provide for the appropriate percentage to be determined by reference to the category of business that a person is expected, on reasonable grounds, to carry on in a particular period;

• (b) provide, in such circumstances as may be prescribed, for different percentages to apply in relation to different parts of the same prescribed accounting period;

• (c) make provision for determining the category of business to be regarded as carried on by a person carrying on businesses in more than one category.

• (7) The regulations may provide for the following matters to be determined in accordance with notices published by the Commissioners—

• (a) when supplies are to be treated as taking place for the purposes of ascertaining a person’s relevant turnover for a particular period;

• (b) the method of calculating any adjustments that fall to be made in accordance with the regulations in a case where a person begins or ceases to participate in the flat-rate scheme.

• (8) The regulations may make provision enabling the Commissioners—

• (a) to authorise a person to participate in the flat-rate scheme with effect from—

• (i) a day before the date of his election to participate, or

• (ii) a day that is not earlier than that date but is before the date of the authorisation;

• (b) to direct that a person shall cease to be a participant in the scheme with effect from a day before the date of the direction.

The day mentioned in paragraph (a)(i) above may be a day before the date on which the regulations come into force.

• (9) Regulations under this section—

• (a) may make different provision for different circumstances;

• (b) may make such incidental, supplemental, consequential or transitional provision as the Commissioners think fit, including provision disapplying or applying with modifications any provision contained in or made under this Act.

Goods imported for private purposes.

27

• (1) Where goods are imported by a taxable person ... and—

• (a) at the time of importation they belong wholly or partly to another person; and

• (b) the purposes for which they are to be used include private purposes either of himself or of the other,

VAT paid or payable by the taxable person on the importation of the goods shall not be regarded as input tax to be deducted or credited under section 25; but he may make a separate claim to the Commissioners for it to be repaid.

• (2) The Commissioners shall allow the claim if they are satisfied that to disallow it would result, in effect, in a double charge to VAT; and where they allow it they shall do so only to the extent necessary to avoid the double charge.

• (3) In considering a claim under this section, the Commissioners shall have regard to the circumstances of the importation and, so far as appearing to them to be relevant, things done with, or occurring in relation to, the goods at any subsequent time.

• (4) Any amount allowed by the Commissioners on the claim shall be paid by them to the taxable person.

• (5) The reference above to a person’s private purposes is to purposes which are not those of any business carried on by him.

Payments on account of VAT.

28

• (1) The Treasury may make an order under this section if they consider it desirable to do so in the interests of the national economy.

• (2) An order under this section may provide that a taxable person of a description specified in the order shall be under a duty—

• (a) to pay, on account of any VAT he may become liable to pay in respect of a prescribed accounting period, amounts determined in accordance with the order, and

• (b) to do so at such times as are so determined.

• (2AA) An order under this section may provide for the matters with respect to which an appeal under section 83 lies to a tribunal to include such decisions of the Commissioners under that or any other order under this section as may be specified in the order.

• (2A) The Commissioners may give directions, to persons who are or may become liable by virtue of any order under this section to make payments on account of VAT, about the manner in which they are to make such payments; and where such a direction has been given to any person and has not subsequently been withdrawn, any duty of that person by virtue of such an order to make such a payment shall have effect as if it included a requirement for the payment to be made in the manner directed.

• (3) Where an order is made under this section, the Commissioners may make regulations containing such supplementary, incidental or consequential provisions as appear to the Commissioners to be necessary or expedient.

• (4) A provision of an order or regulations under this section may be made in such way as the Treasury or, as the case may be, the Commissioners think fit (whether by amending provisions of or made under the enactments relating to VAT or otherwise).

• (5) An order or regulations under this section may make different provision for different circumstances.

Invoices provided by recipients of goods or services.

29

Where—

• (a) a taxable person (“the recipient”) provides a document to himself which purports to be an invoice in respect of a taxable supply of goods or services to him by another taxable person; and

• (b) that document understates the VAT chargeable on the supply,

the Commissioners may, by notice served on the recipient and on the supplier, elect that the amount of VAT understated by the document shall be regarded for all purposes as VAT due from the recipient and not from the supplier.

Part II — Reliefs, exemptions and repayments

Reliefs etc. generally available

Reduced rate

29A

• (1) VAT charged on—

• (a) any supply that is of a description for the time being specified in Schedule 7A, or

• (b) any equivalent ... importation,

shall be charged at the rate of 5 per cent.

• (2) The reference in subsection (1) to an equivalent importation, in relation to any supply that is of a description for the time being specified in Schedule 7A, is a reference to any importation of any goods the supply of which would be such a supply.

• (3) The Treasury may by order vary Schedule 7A by adding to or deleting from it any description of supply or by varying any description of supply for the time being specified in it.

• (4) The power to vary Schedule 7A conferred by subsection (3) above may be exercised so as to describe a supply of goods or services by reference to matters unrelated to the characteristics of the goods or services themselves. In the case of a supply of goods, those matters include, in particular, the use that has been made of the goods.

Zero-rating.

30

• (1) Where a taxable person supplies goods or services and the supply is zero-rated, then, whether or not VAT would be chargeable on the supply apart from this section—

• (a) no VAT shall be charged on the supply; but

• (b) it shall in all other respects be treated as a taxable supply;

and accordingly the rate at which VAT is treated as charged on the supply shall be nil.

• (2) A supply of goods or services is zero-rated by virtue of this subsection if the goods or services are of a description for the time being specified in Schedule 8 or the supply is of a description for the time being so specified.

• (2A) A supply by a person of services which consist of applying a treatment or process to another person’s goods is zero-rated by virtue of this subsection if by doing so he produces goods, and either—

• (a) those goods are of a description for the time being specified in Schedule 8; or

• (b) a supply by him of those goods to the person to whom he supplies the services would be of a description so specified.

• (3) Where goods of a description for the time being specified in that Schedule, or of a description forming part of a description of supply for the time being so specified, are imported, no VAT shall be chargeable on their importation except as otherwise provided in that Schedule.

• (4) The Treasury may by order vary Schedule 8 by adding to or deleting from it any description or by varying any description for the time being specified in it.

• (5) The export of any goods by a charity ... shall for the purposes of this Act be treated as a supply made by the charity—

• (a) in the United Kingdom, and

• (b) in the course or furtherance of a business carried on by the charity.

• (6) A supply of goods is zero-rated by virtue of this subsection if the Commissioners are satisfied that the person supplying the goods—

• (a) has exported them ...; or

• (b) has shipped them for use as stores on a voyage or flight to an eventual destination outside the United Kingdom, or as merchandise for sale by retail to persons carried on such a voyage or flight in a ship or aircraft,

and in either case if such other conditions, if any, as may be specified in regulations or the Commissioners may impose are fulfilled.

• (6A) Subsection (6) does not apply in the case of goods exported from Great Britain if, in respect of the supply, the supplier exercises an option under an order made under section 50A.

• (7) Subsection (6)(b) above shall not apply in the case of goods shipped for use as stores on a voyage or flight to be made by the person to whom the goods were supplied and to be made for a purpose which is private.

• (8) Regulations may provide for the zero-rating of supplies of goods, or of such goods as may be specified in the regulations, in cases where—

• (a) the Commissioners are satisfied that the goods have been or are to be exported to such places as may be specified in the regulations, and

• (b) such other conditions, if any, as may be specified in the regulations or the Commissioners may impose are fulfilled.

• (8A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) Regulations may provide for the zero-rating of a supply of services which is made where goods are let on hire and the Commissioners are satisfied that the goods have been or are to be exported during the period of the letting, and such other conditions, if any, as may be specified in the regulations or the Commissioners may impose are fulfilled.

• (10) Where the supply of any goods has been zero-rated by virtue of subsection (6) above or in pursuance of regulations made under subsection (8) or (9) above and—

• (a) the goods are found in the United Kingdom after the date on which they were alleged to have been or were to be exported or shipped ...; or

• (b) any condition specified in the relevant regulations under subsection (6), (8) or (9) above or imposed by the Commissioners is not complied with,

and the presence of the goods in the United Kingdom after that date or the non-observance of the condition has not been authorised for the purposes of this subsection by the Commissioners, the goods shall be liable to forfeiture under the Management Act and the VAT that would have been chargeable on the supply but for the zero-rating shall become payable forthwith by the person to whom the goods were supplied or by any person in whose possession the goods are found in the United Kingdom; but the Commissioners may, if they think fit, waive payment of the whole or part of that VAT.

Exempt supplies ....

31

• (1) A supply of goods or services is an exempt supply if it is of a description for the time being specified in Part 2 of Schedule 9 and it is not of a description specified in Part 3 of that Schedule ....

• (2) The Treasury may by order vary that Schedule by adding to or deleting from it any description of supply or by varying any description of supply for the time being specified in it, and the Schedule may be varied so as to describe a supply of goods by reference to the use which has been made of them or to other matters unrelated to the characteristics of the goods themselves.

• (3) The Treasury may by regulations make an exemption of a group 16 supply of a description specified in the regulations subject to conditions.

• (4) Regulations under subsection (3) may—

• (a) make different provision for different cases, and

• (b) make consequential or transitional provision (including provision amending this Act).

• (5) In subsection (3) “group 16 supply” means a supply falling within Group 16 of Schedule 9.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32

Refunds of VAT in certain cases.

33

• (1) Subject to the following provisions of this section, where—

• (a) VAT is chargeable on the supply of goods or services to, or on the importation of goods by, a body to which this section applies, and

• (b) the supply... or importation is not for the purpose of any business carried on by the body,

the Commissioners shall, on a claim made by the body at such time and in such form and manner as the Commissioners may determine, refund to it the amount of the VAT so chargeable.

• (2) Where goods or services so supplied to ... or imported by the body cannot be conveniently distinguished from goods or services supplied to ... or imported by it for the purpose of a business carried on by it, the amount to be refunded under this section shall be such amount as remains after deducting from the whole of the chargeable on any supply to ... or importation by the body such proportion thereof as appears to the Commissioners to be attributable to the carrying on of the business; but where—

• (a) the VAT so attributable is or includes VAT attributable, in accordance with regulations under section 26, to exempt supplies by the body, and

• (b) the VAT attributable to the exempt supplies is in the opinion of the Commissioners an insignificant proportion of the VAT so chargeable,

they may include it in the VAT refunded under this section.

• (3) The bodies to which this section applies are—

• (a) a local authority and a combined authority established by an order made under section 103(1) of the Local Democracy, Economic Development and Construction Act 2009;

• (aa) a fire and rescue authority under the Fire and Rescue Services Act 2004, if the authority does not fall within paragraph (a);

• (ab) the Scottish Fire and Rescue Service;

• (b) a river purification board established under section 135 of the Local Government (Scotland) Act 1973, and a water development board within the meaning of section 109 of the Water (Scotland) Act 1980;

• (c) an internal drainage board;

• (d) a passenger transport authority or executive within the meaning of Part II of the Transport Act 1968;

an Integrated Transport Authority, Passenger Transport Authority or Passenger Transport Executive for the purposes of Part 2 of the Transport Act 1968;

• (e) a port health authority within the meaning of the Public Health (Control of Disease) Act 1984, ...;

• (f) a police and crime commissioner, the Mayor's Office for Policing and Crime and ... the Receiver for the Metropolitan Police District;

• (fa) the Scottish Police Authority;

• (fb) the Police Service of Northern Ireland and the Northern Ireland Policing Board;

• (g) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968, a new town commission within the meaning of the New Towns Act (Northern Ireland) 1965 and the Commission for the New Towns;

• (h) a general lighthouse authority within the meaning of Part VIII of the Merchant Shipping Act 1995;

• (i) the British Broadcasting Corporation;

• (ia) S4C;

• (j) the appointed news provider referred to in section 280 of the Communications Act 2003; and

• (k) any body specified for the purposes of this section by an order made by the Treasury.

• (4) No VAT shall be refunded under this section to a general lighthouse authority which in the opinion of the Commissioners is attributable to activities other than those concerned with the provision, maintenance or management of lights or other navigational aids.

• (5) No VAT shall be refunded under this section to an appointed news provider which in the opinion of the Commissioners is attributable to activities other than the provision of news programmes for broadcasting by holders of regional Channel 3 licences (within the meaning of Part I of the Broadcasting Act 1990).

• (6) References in this section to VAT chargeable do not include any VAT which, by virtue of any order under section 25(7), is excluded from credit under that section.

Refunds of VAT to museums and galleries

33A

• (1) Subsections (2) to (5) below apply where—

• (a) VAT is chargeable on the supply of goods or services to, or on the importation of goods by, a body to which this section applies,

• (b) the supply... or importation is attributable to the provision by the body of free rights of admission to a relevant museum or gallery, and

• (c) the supply is made, or the ... importation takes place, on or after 1st April 2001.

• (2) The Commissioners shall, on a claim made by the body in such form and manner as the Commissioners may determine, refund to the body the amount of VAT so chargeable.

• (3) The claim must be made before the end of the claim period.

• (4) Subject to subsection (5) below, “the claim period” is the period of 4 years beginning with the day on which the supply is made or the ... importation takes place.

• (5) If the Commissioners so determine, the claim period is such shorter period beginning with that day as the Commissioners may determine.

• (6) Subsection (7) below applies where goods or services supplied to, ... or imported by, a body to which this section applies that are attributable to free admissions cannot conveniently be distinguished from goods or services supplied to, ... or imported by, the body that are not attributable to free admissions.

• (7) The amount to be refunded on a claim by the body under this section shall be such amount as remains after deducting from the VAT related to the claim such proportion of that VAT as appears to the Commissioners to be attributable otherwise than to free admissions.

• (8) For the purposes of subsections (6) and (7) above—

• (a) goods or services are, and VAT is, attributable to free admissions if they are, or it is, attributable to the provision by the body of free rights of admission to a relevant museum or gallery;

• (b) the VAT related to a claim is the whole of the VAT chargeable on—

• (i) the supplies to the body, and

• (ii) the ... importations by the body,

to which the claim relates.

• (9) The Treasury may by order—

• (a) specify a body as being a body to which this section applies;

• (b) when specifying a body under paragraph (a), specify any museum or gallery that, for the purposes of this section, is a “relevant” museum or gallery in relation to the body;

• (c) specify an additional museum or gallery as being, for the purposes of this section, a “relevant” museum or gallery in relation to a body to which this section applies;

• (d) when specifying a museum or gallery under paragraph (b) or (c), provide that this section shall have effect in the case of the museum or gallery as if in subsection (1)(c) there were substituted for 1st April 2001 a later date specified in the order.

• (10) References in this section to VAT do not include any VAT which, by virtue of any order under section 25(7), is excluded from credit under that section.

Refunds of VAT to Academies

33B

• (1) This section applies where—

• (a) VAT is chargeable on the supply of goods or services to, or on the importation of goods by, the proprietor of an Academy, and

• (b) the supply... or importation is not for the purposes of any business carried on by the proprietor of the Academy.

• (2) The Commissioners shall, on a claim made by the proprietor of the Academy at such time and in such form and manner as the Commissioners may determine, refund to that proprietor the amount of VAT so chargeable.

• (3) Subject to subsection (4), the claim must be made before the end of the period of 4 years beginning with the day on which the supply is made or the ... importation takes place.

• (4) If the Commissioners so determine, the claim period is such shorter period beginning with that day as the Commissioners may determine.

• (5) Subsection (6) applies where goods or services supplied to, ... or imported by, the proprietor of the Academy cannot be conveniently distinguished from goods or services supplied to, ... or imported by, it for the purpose of a business carried on by that proprietor.

• (6) The amount to be refunded under this section is such amount as remains after deducting from the whole of the VAT chargeable on any supply to, ... or importation by, the proprietor of the Academy such proportion of that VAT as appears to the Commissioners to be attributable to the carrying on of the business.

• (7) References in this section to VAT do not include any VAT which, by virtue of an order under section 25(7), is excluded from credit under section 25.

• (8) In this section—

• (a) references to the proprietor of an Academy are to the proprietor of the Academy acting in that capacity, and

• (b) “Academy” and “proprietor” have the same meaning as in the Education Act 1996 (see section 579 of that Act).

Refunds of VAT to charities within section 33D

33C

• (1) This section applies to a charity that falls within any of the descriptions in section 33D.

A charity to which this section applies is referred to in this section as a “qualifying charity”.

• (2) This section applies where—

• (a) VAT is chargeable on the supply of goods or services to, or on the importation of goods by, a qualifying charity, and

• (b) the supply... or importation is not for the purpose of any business carried on by the qualifying charity.

• (3) The Commissioners shall, on a claim made by the qualifying charity at such time and in such form and manner as the Commissioners may determine, refund to the qualifying charity the amount of the VAT so chargeable.

• (4) A claim under subsection (3) above in respect of a supply or importation must be made before the end of the period of 4 years beginning with the day on which the supply is made or the importation takes place.

• (5) Subsection (6) applies where goods or services supplied to, ... or imported by, a qualifying charity otherwise than for the purpose of any business carried on by the qualifying charity cannot be conveniently distinguished from goods or services supplied to, ... or imported by, the qualifying charity for the purpose of such a business.

• (6) The amount to be refunded under this section is such amount as remains after deducting from the whole of the VAT chargeable on any supply to, ... or importation by, the qualifying charity such proportion of that VAT as appears to the Commissioners to be attributable to the carrying on of the business.

• (7) References in this section to VAT do not include any VAT which, by virtue of an order under section 25(7), is excluded from credit under section 25.

Charities to which section 33C applies

33D

Palliative care charities1“Palliative care charity” means a charity the main purpose of which is the provision of palliative care at the direction of, or under the supervision of, a medical professional to persons who are in need of such care as a result of having a terminal illness.2In subsection (1) “medical professional” means—aa registered medical practitioner, orba registered nurse.

Air ambulance charities3“Air ambulance charity” means a charity the main purpose of which is to provide an air ambulance service in pursuance of arrangements made by, or at the request of, a relevant NHS body.4In subsection (3) “relevant NHS body” means a body the main purpose of which is to provide ambulance services and which is—zaan NHS trust in England,aan NHS foundation trust in England,ban NHS trust in Wales,ca Special Health Board constituted under section 2 of the National Health Service (Scotland) Act 1978, orda Health and Social Care trust established under the Health and Personal Social Services (Northern Ireland) Order 1991.

Search and rescue charities5“Search and rescue charity” means a charity that meets condition A or B.6Condition A is that—athe main purpose of the charity is to carry out search and rescue activities in the United Kingdom or the UK marine area, andbthe search and rescue activities carried out by the charity are co-ordinated by a relevant authority.7Condition B is that the main purpose of the charity is to support, develop and promote the activities of a charity which meets condition A.8For the purposes of subsection (6)—“search and rescue activities” means searching for, and rescuing, persons who are, or may be, at risk of death or serious injury;“relevant authority” means—the Secretary of State;a police force;the Scottish Fire and Rescue Service;any other person or body specified for the purposes of subsection (6) by an order made by the Treasury;“police force” means—a police force within the meaning of the Police Act 1996;the Police Service of Scotland;the Police Service of Northern Ireland;the Police Service of Northern Ireland Reserve;the British Transport Police Force;the Civil Nuclear Constabulary;the Ministry of Defence Police;“UK marine area” has the meaning given by section 42(1) of the Marine and Coastal Access Act 2009.

Medical courier charities9“Medical courier charity” means a charity that meets condition A or B.10Condition A is that the main purpose of the charity is to provide services for the transportation of items intended for use for medical purposes, including in particular—ablood;bmedicines and other medical supplies;citems relating to people who are undergoing medical treatment.11Condition B is that the main purpose of the charity is to support, develop and promote the activities of a charity which meets condition A.12In subsection (10) “item” includes any substance.

Power to extend refunds of VAT to other persons

33E

• (1) This section applies where—

• (a) VAT is chargeable on the supply of goods or services to, or on the importation of goods by, a specified person, and

• (b) the supply... or importation is not for the purpose of—

• (i) any business carried on by the person, or

• (ii) a supply by the person which, by virtue of section 41A, is treated as a supply in the course or furtherance of a business.

• (2) If and to the extent that the Treasury so direct, the Commissioners shall, on a claim made by the specified person at such time and in such form and manner as the Commissioners may determine, refund to the person the amount of the VAT so chargeable.

This is subject to subsection (3) below.

• (3) A specified person may not make a claim under subsection (2) above unless it has been agreed with the Treasury that, in the circumstances specified in the agreement, the amount of the person's funding is to be reduced by all or part of the amount of the VAT so chargeable.

• (4) A claim under subsection (2) above in respect of a supply... or importation must be made on or before the relevant day.

• (5) The “relevant day” is—

• (a) in the case of a person who is registered, the last day on which the person may make a return under this Act for the prescribed accounting period containing the last day of the financial year in which the supply is made or the ... importation takes place;

• (b) in the case of a person who is not registered, the last day of the period of 3 months beginning immediately after the end of the financial year in which the supply is made or the ... importation takes place.

• (6) Subsection (7) applies where goods or services supplied to, ... or imported by, a specified person otherwise than for the purpose of—

• (a) any business carried on by the person, or

• (b) a supply falling within subsection (1)(b)(ii) above,

cannot be conveniently distinguished from goods or services supplied to, ... or imported by, the person for such a purpose.

• (7) The amount to be refunded under this section is such amount as remains after deducting from the whole of the VAT chargeable on any supply to, ... or importation by, the specified person such proportion of that VAT as appears to the Commissioners to be attributable to the carrying on of the business or (as the case may be) the making of the supply.

• (8) In this section, “specified person” means a person specified in an order made by the Treasury.

• (9) An order under subsection (8) may make transitional provision or savings.

• (10) References in this section to VAT do not include any VAT which, by virtue of an order under section 25(7), is excluded from credit under section 25.

Capital goods.

34

• (1) The Treasury may by order make provision for the giving of relief, in such cases, to such extent and subject to such exceptions as may be specified in the order, from VAT paid on the supply... or importation for the purpose of a business carried on by any person of machinery or plant or any specified description of machinery or plant in cases where that VAT or part of that VAT cannot be credited under section 25 and such other conditions are satisfied as may be specified in the order.

• (2) Without prejudice to the generality of subsection (1) above, an order under this section may provide for relief to be given by deduction or refunding of VAT and for aggregating or excluding the aggregation of value where goods of the same description are supplied... or imported together.

Refund of VAT to persons constructing certain buildings.

35

• (1) Where—

• (a) a person carries out works to which this section applies,

• (b) his carrying out of the works is lawful and otherwise than in the course or furtherance of any business, and

• (c) VAT is chargeable on the supply... or importation of any goods used by him for the purposes of the works,

subject to subsections (2) to (2C), the Commissioners shall, on a claim made in that behalf, refund to that person the amount of VAT so chargeable.

• (1A) The works to which this section applies are—

• (a) the construction of a building designed as a dwelling or number of dwellings;

• (b) the construction of a building for use solely for a relevant residential purpose or relevant charitable purpose; and

• (c) a residential conversion.

• (1B) For the purposes of this section goods shall be treated as used for the purposes of works to which this section applies by the person carrying out the works in so far only as they are building materials which, in the course of the works, are incorporated in the building in question or its site.

• (1C) Where—

• (a) a person (“the relevant person”) carries out a residential conversion by arranging for any of the work of the conversion to be done by another (“a contractor”),

• (b) the relevant person’s carrying out of the conversion is lawful and otherwise than in the course or furtherance of any business,

• (c) the contractor is not acting as an architect, surveyor or consultant or in a supervisory capacity, and

• (d) VAT is chargeable on services consisting in the work done by the contractor,

subject to subsections (2) to (2C), the Commissioners shall, on a claim made in that behalf, refund to the relevant person the amount of VAT so chargeable.

• (1D) For the purposes of this section works constitute a residential conversion to the extent that they consist in the conversion of a non-residential building, or a non-residential part of a building, into—

• (a) a building designed as a dwelling or a number of dwellings;

• (b) a building intended for use solely for a relevant residential purpose; or

• (c) anything which would fall within paragraph (a) or (b) above if different parts of a building were treated as separate buildings.

• (2) The Commissioners shall not be required to entertain a claim for a refund of VAT under this section unless the claim—

• (a) is made within such time and in such form and manner, and

• (b) contains such information, and

• (c) is accompanied by such documents, whether by way of evidence or otherwise,

as may be specified by regulations or by the Commissioners in accordance with regulations.

• (2A) Where a person has made a claim for a refund of VAT under this section, before determining the claim the Commissioners may by notice require the person to produce further documents, by way of evidence or otherwise, that the Commissioners reasonably require in connection with the claim.

• (2B) A notice under subsection (2A) must specify the time within which, and the form and manner in which, the documents must be produced.

• (2C) Where the person does not produce the documents required by a notice under subsection (2A), the Commissioners may refuse to refund the amount of VAT (or any part of it) in respect of which the claim was made.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) The notes to Group 5 of Schedule 8 shall apply for construing this section as they apply for construing that Group but this is subject to subsection (4A) below.

• (4A) The meaning of “non-residential” given by Note (7A) of Group 5 of Schedule 8 (and not that given by Note (7) of that Group) applies for the purposes of this section but as if—

• (a) references in that Note to item 3 of that Group were references to this section, and

• (b) paragraph (b)(iii) of that Note were omitted.

• (5) The power of the Treasury by order under section 30 to vary Schedule 8 shall include—

• (a) power to apply any variation made by the order for the purposes of this section; and

• (b) power to make such consequential modifications of this section as they may think fit.

Bad debts.

36

• (1) Subsection (2) below applies where—

• (a) a person has supplied goods or services . . . and has accounted for and paid VAT on the supply,

• (b) the whole or any part of the consideration for the supply has been written off in his accounts as a bad debt, and

• (c) a period of 6 months (beginning with the date of the supply) has elapsed.

• (2) Subject to the following provisions of this section and to regulations under it the person shall be entitled, on making a claim to the Commissioners, to a refund of the amount of VAT chargeable by reference to the outstanding amount.

• (3) In subsection (2) above “the outstanding amount” means—

• (a) if at the time of the claim no part of the consideration written off in the claimant’s accounts as a bad debt has been received, an amount equal to the amount of the consideration so written off;

• (b) if at that time any part of the consideration so written off has been received, an amount by which that part is exceeded by the amount of the consideration written off;

and in this subsection “received” means received either by the claimant or by a person to whom has been assigned a right to receive the whole or any part of the consideration written off.

• (3A) For the purposes of this section, where the whole or any part of the consideration for the supply does not consist of money, the amount in money that shall be taken to represent any non-monetary part of the consideration shall be so much of the amount made up of—

• (a) the value of the supply, and

• (b) the VAT charged on the supply,

as is attributable to the non-monetary consideration in question.

• (4) A person shall not be entitled to a refund under subsection (2) above unless—

• (a) the value of the supply is equal to or less than its open market value, . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) Regulations under this section may—

• (a) require a claim to be made at such time and in such form and manner as may be specified by or under the regulations;

• (b) require a claim to be evidenced and quantified by reference to such records and other documents as may be so specified;

• (c) require the claimant to keep, for such period and in such form and manner as may be so specified, those records and documents and a record of such information relating to the claim and to anything subsequently received by way of consideration as may be so specified;

• (d) require the repayment of a refund allowed under this section where any requirement of the regulations is not complied with;

• (e) require the repayment of the whole or, as the case may be, an appropriate part of a refund allowed under this section where any part (or further part) of the consideration written off in the claimant’s accounts as a bad debt is subsequently received either by the claimant or, except in such circumstances as may be prescribed, by a person to whom has been assigned a right to receive the whole or any part of that consideration;

• (ea) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (f) include such supplementary, incidental, consequential or transitional provisions as appear to the Commissioners to be necessary or expedient for the purposes of this section;

• (g) make different provision for different circumstances.

• (6) The provisions which may be included in regulations by virtue of subsection (5)(f) above may include rules for ascertaining—

• (a) whether, when and to what extent consideration is to be taken to have been written off in accounts as a bad debt;

• (b) whether anything received is to be taken as received by way of consideration for a particular supply;

• (c) whether, and to what extent, anything received is to be taken as received by way of consideration written off in accounts as a bad debt.

• (7) The provisions which may be included in regulations by virtue of subsection (5)(f) above may include rules dealing with particular cases, such as those involving receipt of part of the consideration or mutual debts; and in particular such rules may vary the way in which the following amounts are to be calculated—

• (a) the outstanding amount mentioned in subsection (2) above, and

• (b) the amount of any repayment where a refund has been allowed under this section.

• (8) Section 6 shall apply for determining the time when a supply is to be treated as taking place for the purposes of construing this section.

Acquisitions

Relief from VAT on acquisition if importation would attract relief

36A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Imports, overseas businesses etc

VAT on importation of goods: reliefs etc

37

• (A1) No VAT is chargeable on the importation of goods to which section 7(5B) applies.

• (1) The Treasury may by order make provision for giving relief from the whole or part of the VAT chargeable on the importation of goods ..., subject to such conditions (including conditions prohibiting or restricting the disposal of or dealing with the goods) as may be imposed by or under the order....

• (2) In any case where—

• (a) it is proposed that goods which have been imported ... by any person (“the original importer”) with the benefit of relief under subsection (1) above shall be transferred to another person (“the transferee”), and

• (b) on an application made by the transferee, the Commissioners direct that this subsection shall apply,

this Act shall have effect as if, on the date of the transfer of the goods (and in place of the transfer), the goods were exported by the original importer and imported by the transferee and, accordingly, where appropriate, provision made under subsection (1) above shall have effect in relation to the VAT chargeable on the importation of the goods by the transferee.

• (3) The Commissioners may by regulations make provision for remitting or repaying, if they think fit, the whole or part of the VAT chargeable on the importation of any goods ... which are shown to their satisfaction to have been previously exported ....

• (4) The Commissioners may by regulations make provision for remitting or repaying the whole or part of the VAT chargeable on the importation of any goods ... if they are satisfied that the goods have been or are to be re-exported ... and they think fit to do so in all the circumstances and having regard—

• (a) to the VAT chargeable on the supply of like goods in the United Kingdom;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Importation of goods by taxable persons.

38

The Commissioners may by regulations make provision for enabling goods imported ... by a taxable person in the course or furtherance of any business carried on by him to be delivered or removed, subject to such conditions or restrictions as the Commissioners may impose for the protection of the revenue, without payment of the VAT chargeable on the importation, and for that VAT to be accounted for together with the VAT chargeable on the supply of goods or services by him ....

Repayment of VAT to those in business overseas.

39

• (1) The Commissioners may, by means of a scheme embodied in regulations, provide for the repayment, to persons carrying on business wholly outside the United Kingdom, of VAT which would be input tax of theirs if they were taxable persons in the United Kingdom.

• (2) The scheme may make different provision in relation to persons carrying on business in different places.

• (3) Repayment shall be made in such cases and to such extent only, and subject to such conditions, as the scheme may prescribe (being conditions specified in the regulations or imposed by the Commissioners either generally or in particular cases); and the scheme may provide—

• (za) for claims to be made in such form and manner as may be specified in the scheme or by the Commissioners in accordance with the scheme;

• (a) for claims and repayments to be made only through agents in the United Kingdom;

• (b) either generally or for specified purposes—

• (i) for the agents to be treated under this Act as if they were taxable persons; and

• (ii) for treating claims as if they were returns under this Act in respect of such period as may be prescribed and repayments as if they were repayments of input tax; ...

• (ba) for and in connection with the payment of interest to or by the Commissioners (including in relation to the repayment of interest wrongly paid), and

• (c) for generally regulating—

• (i) the time by which claims must be made, and

• (ii) the methods by which the amount of any repayment is to be determined and the repayment is to be made.

Applications for forwarding of VAT repayment claims to other member States

39A

The Commissioners must make arrangements for dealing with applications made to the Commissioners by taxable persons, in accordance with Council Directive 2008/9/EC, for the forwarding to the tax authorities of another member State of claims for refunds of VAT on—

• (a) supplies to them in that member State, or

• (b) the importation of goods by them into that member State from places outside the member States.

Refunds in relation to new means of transport supplied to other member States.

40

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part III — Application of Act in particular cases

Northern Ireland Protocol

40A

• (1) Schedule 9ZA—

• (a) makes provision about a charge to VAT on acquisitions of goods in Northern Ireland from a member State, and

• (b) contains modifications of the other provisions of this Act in connection with the movement of goods between Northern Ireland and member States.

• (2) Schedule 9ZB—

• (a) makes provision about VAT charged on goods imported into the United Kingdom as a result of their entry into Northern Ireland,

• (b) makes provision about the treatment, for the purposes of VAT, of goods that are removed from Northern Ireland to Great Britain and goods that are removed from Great Britain to Northern Ireland, and

• (c) contains other provision relevant to the application of this Act in Northern Ireland.

• (3) Schedule 9ZC makes provision, as a result of the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement, about the application of this Act in cases involving—

• (a) supplies of goods by persons established outside the United Kingdom that are facilitated by online marketplaces, and

• (b) the importation of goods of a low value.

• (4) Schedule 9ZD—

• (a) establishes a special accounting scheme (“the OSS scheme”) for use by persons making intra-Community distance sales of goods from Northern Ireland to member States, and

• (b) makes provision about corresponding schemes in member States.

• (5) Schedule 9ZE—

• (a) establishes a special accounting scheme (“the IOSS scheme”) for use by persons supplying imported goods to Northern Ireland or into the European Union, and

• (b) makes provision about corresponding schemes in member States.

• (6) Schedule 9ZF makes provision modifying other provisions of this Act and other enactments in connection with the provision made in Schedules 9ZD and 9ZE.

• (7) The Treasury may by regulations—

• (a) amend Schedules 9ZD and 9ZE, and

• (b) amend Parts 1 and 2 of Schedule 9ZF,

(including by inserting provision modifying any provision of an Act whenever passed or made).

• (8) The Commissioners may by regulations—

• (a) amend Part 3 of Schedule 9ZF (including by inserting provision modifying any provision of an Act whenever passed or made), and

• (b) make such further provision as they consider appropriate about the administration, collection or enforcement of value added tax due under Schedules 9ZD and 9ZE.

• (9) Regulations under subsections (7) and (8) may—

• (a) confer on a person specified in the regulations a discretion to do anything under, or for the purposes of, the regulations;

• (b) make provision by reference to things specified in a notice published in accordance with the regulations;

• (c) make consequential, transitional, transitory, saving, supplementary or incidental provision.

Application to the Crown.

41

• (1) This Act shall apply in relation to taxable supplies by the Crown as it applies in relation to taxable supplies by taxable persons.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Where VAT is chargeable on the supply of goods or services to a Government department ... or on the importation of any goods by a Government department ... and the supply ... or importation is not for the purpose—

• (a) of any business carried on by the department, or

• (b) of a supply by the department which, by virtue of section 41A, is treated as a supply in the course or furtherance of a business,

then, if and to the extent that the Treasury so direct and subject to subsection (4) below, the Commissioners shall, on a claim made by the department at such time and in such form and manner as the Commissioners may determine, refund to it the amount of the VAT so chargeable.

• (4) The Commissioners may make the refunding of any amount due under subsection (3) above conditional upon compliance by the claimant with requirements with respect to the keeping, preservation and production of records relating to the supply... or importation in question.

• (5) For the purposes of this section goods or services obtained by one Government department from another Government department shall be treated, if and to the extent that the Treasury so direct, as supplied by that other department and similarly as regards goods or services obtained by or from the Crown Estate Commissioners.

• (6) In this section “Government department” includes the Scottish Administration , the Welsh Assembly Government, a Northern Ireland department, a Northern Ireland health and social services body, any body of persons exercising functions on behalf of a Minister of the Crown, including ... any part of a Government department (as defined in the foregoing) designated for the purposes of this subsection by a direction of the Treasury.

• (7) For the purposes of subsection (6) each of the following is to be regarded as a body of persons exercising functions on behalf of a Minister of the Crown —

• (a) a health service body as defined in section 60(7) of the National Health Service and Community Care Act 1990,

• (b) a National Health Service trust established under Part I of that Act or the National Health Service (Scotland) Act 1978 ,

• (c) an NHS foundation trust ,

• (d) a Primary Care Trust ,

• (e) a Local Health Board ,

• (f) an integrated care board,

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (h) NHS England ,

• (i) the National Institute for Health and Care Excellence ,

• (j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (k) the Health Research Authority (also established by that Act),

• (l) a strategic highways company appointed under section 1 of the Infrastructure Act 2015.

• (8) In subsection (6) “a Northern Ireland health and social services body” means—

• (a) a health and social services body as defined in Article 7(6) of the Health and Personal Social Services (Northern Ireland) Order 1991; and

• (b) a Health and Social Services trust established under that Order.

Supply of goods or services by public bodies

41A

• (1) This section applies where goods or services are supplied by a public authority in the course of activities or transactions in which it is engaged as a public authority.

• (2) Unless the supply is on such a small scale as to be negligible, it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business if it is in respect of any of the following activities—

• (a) telecommunications services,

• (b) supply of water, gas, electricity or thermal energy,

• (c) transport of goods,

• (d) port or airport services,

• (e) passenger transport,

• (f) supply of new goods manufactured for sale,

• (g) engaging in transactions in respect of agricultural products in the exercise of regulatory functions,

• (h) organisation of trade fairs or exhibitions,

• (i) warehousing,

• (j) activities of commercial publicity bodies,

• (k) activities of travel agents,

• (l) running of staff shops, cooperatives, industrial canteens, or similar institutions, or

• (m) activities carried out by radio and television bodies which are of a commercial nature.

• (3) If the supply is not in respect of such an activity, it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business if (and only if) not charging VAT on the supply would lead to a significant distortion of competition.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Local authorities.

42

A local authority which makes taxable supplies is liable to be registered under this Act, whatever the value of the supplies; and accordingly Schedule 1 shall apply, in a case where the value of the taxable supplies made by a local authority in any period of one year does not exceed the sum for the time being specified in paragraph 1(1)(a) of that Schedule, as if that value exceeded that sum.

Groups of companies.

43

• (1) Where under sections 43A to 43D any persons are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and—

• (a) any supply of goods or services by a member of the group to another member of the group shall be disregarded; and

• (b) any supply which is a supply to which paragraph (a) above does not apply and is a supply of goods or services by or to a member of the group shall be treated as a supply by or to the representative member; and

• (c) any VAT paid or payable by a member of the group on the importation of goods shall be treated as paid or payable by the representative member and the goods shall be treated, for the purposes of sections 38 and 73(7), as imported by the representative member;

and all members of the group shall be liable jointly and severally for any VAT due from the representative member.

• (1AA) Where—

• (a) it is material, for the purposes of any provision made by or under this Act (“the relevant provision”), whether the person by or to whom a supply is made, or the person by whom goods are ... imported, is a person of a particular description,

• (b) paragraph (b) or (c) of subsection (1) above applies to any supply... or importation, and

• (c) there is a difference that would be material for the purposes of the relevant provision between—

• (i) the description applicable to the representative member, and

• (ii) the description applicable to the person who (apart from this section) would be regarded for the purposes of this Act as making the supply... or importation or, as the case may be, as being the person to whom the supply is made,

the relevant provision shall have effect in relation to that supply... or importation as if the only description applicable to the representative member were the description in fact applicable to that person.

• (1AB) Subsection (1AA) above does not apply to the extent that what is material for the purposes of the relevant provision is whether a person is a taxable person.

• (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) An order under section 5(5) or (6) may make provision for securing that any goods or services which, if all the members of the group were one person, would fall to be treated under that section as supplied to and by that person, are treated as supplied to and by the representative member and may provide for that purpose that the representative member is to be treated as a person of such description as may be determined under the order..

• (2A) A supply made by a member of a group (“ the supplier ”) to another member of the group (“ the UK member ”) shall not be disregarded under subsection (1)(a) above if—

• (a) it would (if there were no group) be a supply of services to which section 7A(2)(a) applies made to a person belonging in the United Kingdom;

• (b) those services are not within any of the descriptions specified in Part 2 of Schedule 9 or are within any of the descriptions specified in Part 3 of that Schedule;

• (c) the supplier has been supplied (whether or not by a person belonging in the United Kingdom) with any services ... which do not fall within any of the descriptions specified in Part 2 of Schedule 9 or which do fall within any of the descriptions specified in Part 3 of that Schedule and section 7A(2)(a) applied to the supply;

• (d) the supplier belonged outside the United Kingdom when it was supplied with the services mentioned in paragraph (c) above; and

• (e) the services so mentioned have been used by the supplier for making the supply to the UK member.

• (2B) Subject to subsection (2C) below, where a supply is excluded by virtue of subsection (2A) above from the supplies that are disregarded in pursuance of subsection (1)(a) above, all the same consequences shall follow under this Act as if that supply—

• (a) were a taxable supply in the United Kingdom by the representative member to itself, and

• (b) without prejudice to that, were made by the representative member in the course or furtherance of its business.

• (2C) Except in so far as the Commissioners may by regulations otherwise provide, a supply which is deemed by virtue of subsection (2B) above to be a supply by the representative member to itself—

• (a) shall not be taken into account as a supply made by the representative member when determining any allowance of input tax under section 26(1) in the case of the representative member;

• (b) shall be deemed for the purposes of paragraph 1 of Schedule 6 to be a supply in the case of which the person making the supply and the person supplied are connected within the meaning of section 1122 of the Corporation Tax Act 2010 (connected persons); and

• (c) subject to paragraph (b) above and paragraph 8A of Schedule 6, shall be taken to be a supply the value and time of which are determined as if it were a supply of services which is treated by virtue of section 8 as made by the person by whom the services are received.

• (2D) For the purposes of subsection (2A) above where—

• (a) there has been a supply of the assets of a business of a person (“ the transferor ”) to a person to whom the whole or any part of that business was transferred as a going concern (“ the transferee ”),

• (b) that supply is either—

• (i) a supply falling to be treated, in accordance with an order under section 5(3), as being neither a supply of goods nor a supply of services, or

• (ii) a supply that would have fallen to be so treated if it had taken place in the United Kingdom,

and

• (c) the transferor was supplied with services ... at a time before the transfer when the transferor belonged outside the United Kingdom and section 7A(2)(a) applied to the supply,

those services, so far as they are used by the transferee for making any supply to which section 7A(2)(a) applies, shall be deemed to have been supplied to the transferee at a time when the transferee belonged outside the United Kingdom.

• (2E) Where, in the case of a supply of assets falling within paragraphs (a) and (b) of subsection (2D) above—

• (a) the transferor himself acquired any of the assets in question by way of a previous supply of assets falling within those paragraphs, and

• (b) there is a supply to which section 7A(2)(a) applies of services which, if used by the transferor for making such a supply, would be deemed by virtue of that subsection to have been supplied to the transferor at a time when he belonged outside the United Kingdom,

that subsection shall have effect, notwithstanding that the services have not been so used by the transferor, as if the transferor were a person to whom those services were supplied and as if he were a person belonging outside the United Kingdom at the time of their deemed supply to him; and this subsection shall apply accordingly through any number of successive supplies of assets falling within paragraphs (a) and (b) of that subsection.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) Schedule 9A (which makes provision for ensuring that this section is not used for tax avoidance) shall have effect.

Groups: eligibility.

43A

• (1) Two or more UK bodies corporate are eligible to be treated as members of a group if ...—

• (a) one of them controls each of the others,

• (b) one person (whether a body corporate or an individual) controls all of them, or

• (c) two or more individuals carrying on a business in partnership control all of them.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) An individual carrying on a business and one or more UK bodies corporate are eligible to be treated as members of a group if the individual—

• (a) controls the UK body corporate or all of the UK bodies corporate, and

• (b) is established, or has a fixed establishment, in the United Kingdom in relation to the business.

• (5) Two or more relevant persons carrying on a business in partnership (“the partnership”) and one or more UK bodies corporate are eligible to be treated as members of a group if the partnership—

• (a) controls the UK body corporate or all of the UK bodies corporate, and

• (b) is established, or has a fixed establishment, in the United Kingdom in relation to the business.

• (6) In this section—

• (a) “UK body corporate” means a body corporate which is established or has a fixed establishment in the United Kingdom;

• (b) “relevant person” means an individual, a body corporate or a Scottish partnership.

• (7) Section 43AZA contains provision for determining for the purposes of this section whether a body corporate, individual or partnership controls a UK body corporate.

Section 43A: control test

43AZA

• (1) This section applies for the purposes of section 43A (and expressions used in this section have the same meaning as in that section).

• (2) A body corporate (“X”) controls a UK body corporate if—

• (a) X is empowered by statute to control the UK body corporate's activities, or

• (b) X is the UK body corporate's holding company.

• (3) An individual (“Y”) controls a UK body corporate if Y would, were Y a company, be the UK body corporate's holding company.

• (4) Two or more relevant persons carrying on a business in partnership (“the partnership”) control a UK body corporate if the partnership would, were it a company, be the UK body corporate's holding company.

• (5) In this section “holding company” has the meaning given by section 1159 of, and Schedule 6 to, the Companies Act 2006.

Power to alter eligibility for grouping

43AA

• (1) The Treasury may by order provide for sections 43A and 43AZA to have effect with specified modifications in relation to a specified class of person.

• (2) An order under subsection (1) may, in particular—

• (a) make provision by reference to generally accepted accounting practice;

• (b) define generally accepted accounting practice for that purpose by reference to a specified document or instrument (and may provide for the reference to be read as including a reference to any later document or instrument that amends or replaces the first);

• (c) adopt any statutory or other definition of generally accepted accounting practice (with or without modification);

• (d) make provision by reference to what would be required or permitted by generally accepted accounting practice if accounts, or accounts of a specified kind, were prepared for a person.

• (3) An order under subsection (1) may also, in particular, make provision by reference to—

• (a) the nature of a person;

• (b) past or intended future activities of a person;

• (c) the relationship between a number of persons;

• (d) the effect of including a person within a group or of excluding a person from a group.

• (4) An order under subsection (1) may—

• (a) make provision which applies generally or only in specified circumstances;

• (b) make different provision for different circumstances;

• (c) include supplementary, incidental, consequential or transitional provision.

Groups: applications.

43B

• (1) This section applies where an application is made to the Commissioners for two or more persons, who are eligible by virtue of section 43A, to be treated as members of a group.

• (2) This section also applies where two or more persons are treated as members of a group and an application is made to the Commissioners—

• (a) for another person, who is eligible by virtue of section 43A to be treated as a member of the group, to be treated as a member of the group,

• (b) for a person to cease to be treated as a member of the group,

• (c) for a member to be substituted as the group’s representative member, or

• (d) for the persons no longer to be treated as members of a group.

• (3) An application with respect to any persons—

• (a) must be made by one of them or by the person controlling them, and

• (b) in the case of an application for the persons to be treated as a group, must appoint one of them as the representative member.

• (4) Where this section applies in relation to an application it shall, subject to subsection (6) below, be taken to be granted with effect from—

• (a) the day on which the application is received by the Commissioners, or

• (b) such earlier or later time as the Commissioners may allow.

• (5) The Commissioners may refuse an application, within the period of 90 days starting with the day on which it was received by them, if it appears to them—

• (a) in the case of an application such as is mentioned in subsection (1) above, that the persons are not eligible by virtue of section 43A to be treated as members of a group,

• (b) in the case of an application such as is mentioned in subsection (2)(a) above, that the person is not eligible by virtue of section 43A to be treated as a member of the group, or

• (c) in any case, that refusal of the application is necessary for the protection of the revenue.

• (6) If the Commissioners refuse an application it shall be taken never to have been granted.

Groups: termination of membership.

43C

• (1) The Commissioners may, by notice given to a person, terminate its treatment as a member of a group from a date—

• (a) which is specified in the notice, and

• (b) which is, or falls after, the date on which the notice is given.

• (2) The Commissioners may give a notice under subsection (1) above only if it appears to them to be necessary for the protection of the revenue.

• (3) Where—

• (a) a person is treated as a member of a group, and

• (b) it appears to the Commissioners that the person is not, or is no longer, eligible by virtue of section 43A to be treated as a member of the group,

the Commissioners shall, by notice given to the person, terminate its treatment as a member of the group from a date specified in the notice.

• (4) The date specified in a notice under subsection (3) above may be earlier than the date on which the notice is given but shall not be earlier than—

• (a) the first date on which, in the opinion of the Commissioners, the person was not eligible to be treated as a member of the group, or

• (b) the date on which, in the opinion of the Commissioners, the person ceased to be eligible to be treated as a member of the group.

Groups: duplication

43D

• (1) A person may not be treated as a member of more than one group at a time.

• (2) A person who is a member of one group is not eligible by virtue of section 43A to be treated as a member of another group.

• (3) If—

• (a) an application under section 43B(1) would have effect from a time in accordance with section 43B(4), but

• (b) at that time one or more of the persons specified in the application is a member of a group (other than that to which the application relates),

the application shall have effect from that time, but with the exclusion of the person or persons mentioned in paragraph (b).

• (4) If—

• (a) an application under section 43B(2)(a) would have effect from a time in accordance with section 43B(4), but

• (b) at that time the person specified in the application is a member of a group (other than that to which the application relates),

the application shall have no effect.

• (5) Where a person is a subject of two or more applications under section 43B(1) or (2)(a) that have not been granted or refused, the applications shall have no effect.

Supplies to groups.

44

• (1) Subject to subsections (2) to (4) below, subsection (5) below applies where—

• (a) a business, or part of a business, carried on by a taxable person is transferred as a going concern to a person treated as a member of a group under section 43;

• (b) on the transfer of the business or part, chargeable assets of the business are transferred to the person; and

• (c) the transfer of the assets is treated by virtue of section 5(3)(c) as neither a supply of goods nor a supply of services.

• (2) Subsection (5) below shall not apply if the representative member of the group is entitled to credit for the whole of the input tax on supplies to it and ... importations by it—

• (a) during the prescribed accounting period in which the assets are transferred, and

• (b) during any longer period to which regulations under section 26(3)(b) relate and in which the assets are transferred.

• (3) Subsection (5) below shall not apply if the Commissioners are satisfied that the assets were assets of the taxable person transferring them more than 3 years before the day on which they are transferred.

• (4) Subsection (5) below shall not apply to the extent that the chargeable assets consist of capital items in respect of which regulations made under section 26(3) and (4), and in force when the assets are transferred, provide for adjustment to the deduction of input tax.

• (5) The chargeable assets shall be treated for the purposes of this Act as being, on the day on which they are transferred, both supplied to the representative member of the group for the purpose of its business and supplied by that member in the course or furtherance of its business.

• (6) A supply treated under subsection (5) above as made by a representative member shall not be taken into account as a supply made by him when determining the allowance of input tax in his case under section 26.

• (7) The value of a supply treated under subsection (5) above as made to or by a representative member shall be taken to be the open market value of the chargeable assets.

• (8) For the purposes of this section, the open market value of any chargeable assets shall be taken to be the price that would be paid on a sale (on which no VAT is payable) between a buyer and a seller who are not in such a relationship as to affect the price.

• (9) The Commissioners may reduce the VAT chargeable by virtue of subsection (5) above in a case where they are satisfied that the person by whom the chargeable assets are transferred has not received credit for the full amount of input tax arising on the supply to or ... importation by him of the chargeable assets.

• (10) For the purposes of this section, assets are chargeable assets if their supply in the United Kingdom by a taxable person in the course or furtherance of his business would be a taxable supply (and not a zero-rated supply).

Partnerships.

45

• (1) The registration under this Act of persons—

• (a) carrying on a business in partnership, ...

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

may be in the name of the firm; and no account shall be taken, in determining for any purpose of this Act whether goods or services are supplied to or by such persons ..., of any change in the partnership.

• (2) Without prejudice to section 36 of the Partnership Act 1890 (rights of persons dealing with firm against apparent members of firm), until the date on which a change in the partnership is notified to the Commissioners a person who has ceased to be a member of a partnership shall be regarded as continuing to be a partner for the purposes of this Act and, in particular, for the purpose of any liability for VAT on the supply of goods or services by the partnership ....

• (3) Where a person ceases to be a member of a partnership during a prescribed accounting period (or is treated as so doing by virtue of subsection (2) above) any notice, whether of assessment or otherwise, which is served on the partnership and relates to, or to any matter arising in, that period or any earlier period during the whole or part of which he was a member of the partnership shall be treated as served also on him.

• (4) Without prejudice to section 16 of the Partnership Act 1890 (notice to acting partner to be notice to the firm) any notice, whether of assessment or otherwise, which is addressed to a partnership by the name in which it is registered by virtue of subsection (1) above and is served in accordance with this Act shall be treated for the purposes of this Act as served on the partnership and, accordingly, where subsection (3) above applies, as served also on the former partner.

• (5) Subsections (1) and (3) above shall not affect the extent to which, under section 9 of the Partnership Act 1890, a partner is liable for VAT owed by the firm; but where a person is a partner in a firm during part only of a prescribed accounting period, his liability for VAT on the supply by the firm of goods or services during that accounting period ... shall be such proportion of the firm’s liability as may be just.

Business carried on in divisions or by unincorporated bodies, personal representatives etc.

46

• (1) The registration under this Act of a body corporate carrying on a business in several divisions may, if the body corporate so requests and the Commissioners see fit, be in the names of those divisions.

• (2) The Commissioners may by regulations make provision for determining by what persons anything required by or under this Act to be done by a person carrying on a business is to be done where a business is carried on in partnership or by a club, association or organisation the affairs of which are managed by its members or a committee or committees of its members.

• (3) The registration under this Act of any such club, association or organisation may be in the name of the club, association or organisation; and in determining whether goods or services are supplied to or by such a club, association or organisation ..., no account shall be taken of any change in its members.

• (4) The Commissioners may by regulations make provision for persons who carry on a business of a taxable person who has died or become bankrupt or has had his estate sequestrated or has become incapacitated to be treated for a limited time as taxable persons, and for securing continuity in the application of this Act in cases where persons are so treated.

• (5) In relation to a company which is a taxable person, the reference in subsection (4) above to the taxable person having become bankrupt or having had his estate sequestrated or having become incapacitated shall be construed as a reference to its being in liquidation or receivership or administration.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agents etc.

47

• (1) Where goods are imported by a taxable person (“T”) who supplies them as agent for a person who is not a taxable person, then, if T acts in relation to the supply in T's own name, the goods are to be treated for the purposes of this Act as imported and supplied by T as principal.

• (2) For the purposes of subsection (1) above a person who is not resident in the United Kingdom and whose place or principal place of business is outside the United Kingdom may be treated as not being a taxable person if as a result he will not be required to be registered under this Act.

• (2A) Where, in the case of any supply of goods to which subsection (1) above does not apply, goods are supplied through an agent who acts in his own name, the supply shall be treated both as a supply to the agent and as a supply by the agent.

• (3) Where . . . services, other than electronically supplied services and telecommunication services, are supplied through an agent who acts in his own name the Commissioners may, if they think fit, treat the supply both as a supply to the agent and as a supply by the agent.

• (4) Where electronically supplied services or telecommunication services are supplied through an agent, acting in the agent's own name, the supply is to be treated both as a supply to the agent and as a supply by the agent.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) In this section “electronically supplied services” and “telecommunication services” have the same meaning as in Schedule 4A (see paragraph 9(3) and (4) and paragraph 9E(2) of that Schedule).

VAT representatives and security.

48

• (1) Subsection (1ZA) applies where any person—

• (a) is a taxable person for the purposes of this Act or, without being a taxable person, is a person who makes taxable supplies ...;

• (b) is not established, and does not have any fixed establishment, in the United Kingdom;

• (ba) is established in a country or territory in respect of which it appears to the Commissioners that the condition specified in subsection (1A) below is satisfied; and

• (c) in the case of an individual, does not have his usual place of residence or permanent address in the United Kingdom,

...

• (1ZA) The Commissioners may direct the person to secure that there is a UK-established person who is—

• (a) appointed to act on the person's behalf in relation to VAT, and

• (b) registered against the name of the person in accordance with any regulations under subsection (4).

• (1A) The condition mentioned in subsection (1)(ba) is that there are no arrangements in relation to the country or territory relating to VAT which—

• (a) have effect by virtue of an Order in Council under section 173 of the Finance Act 2006, and

• (b) contain provision of a kind mentioned in subsection (2)(a) and (b) of that section.

• (1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) With the agreement of the Commissioners, a person—

• (a) who has not been given a direction under subsection (1ZA) , and

• (b) in relation to whom the conditions specified in paragraphs (a), (b) and (c) of subsection (1) are satisfied,

may appoint a UK-established person to act on his behalf in relation to VAT.

• (2A) In this Act “VAT representative” means a person appointed under subsection (1ZA) or (2) above.

• (3) Where any person is appointed by virtue of this section to be the VAT representative of another (“his principal”), then, subject to subsections (4) to (6) below, the VAT representative—

• (a) shall be entitled to act on his principal’s behalf for any of the purposes of this Act, of any other enactment (whenever passed) relating to VAT or of any subordinate legislation made under this Act or any such enactment;

• (b) shall, subject to such provisions as may be made by the Commissioners by regulations, secure (where appropriate by acting on his principal’s behalf) his principal’s compliance with and discharge of the obligations and liabilities to which his principal is subject by virtue of this Act, any such other enactment or any such subordinate legislation; and

• (c) shall be personally liable in respect of—

• (i) any failure to secure his principal’s compliance with or discharge of any such obligation or liability; and