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The Value Added Tax Regulations 1995

Type Statutory-Instrument

Publication 1995-09-27

Last updated 2025-06-13

State In force

Department King's Printer of Acts of Parliament

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(3) The Commissioners may in relation to a trade or business of a description specified by them supplement the list of information required in paragraph (2) above by a notice published by them for that purpose.

Correction of errors

34

—

(1) Subject to paragraph (1A) below, this regulation applies where a taxable person has made a return, or returns, to the Controller which overstated or understated his liability to VAT or his entitlement to a payment under section 25(3) of the Act.

(1A) Subject to paragraph (1B) and (1C) below, any overstatement or understatement in a return where—

(a) a period of 4 years has elapsed since the end of the prescribed accounting period for which the return was made; and

(b) the taxable person has not (in relation to that overstatement or understatement) corrected his VAT account in accordance with this regulation before the end of the prescribed accounting period during which that period of 4 years has elapsed,

shall be disregarded for the purposes of this regulation; and in paragraphs (2) to (6) of this regulation “overstatement”, “understatement” and related expressions shall be construed accordingly.

(1B) Paragraph (1A) above does not apply where—

(a) the overstatement or understatement is discovered in a prescribed accounting period which begins before 1st May 1997; and

(b) the return for that prescribed accounting period has not been made, and was not required to have been made, before that date.

(1C) Where paragraph (1B) above does not apply, any overstatement or understatement in a return shall be disregarded for the purposes of this regulation where the prescribed accounting period for which the return was made or required to be made ended on or before 31st March 2006.

(2) In this regulation—

(a) “under-declarations of liability” means the aggregate of—

(i) the amount (if any) by which credit for input tax was overstated in any return, and

(ii) the amount (if any) by which output tax was understated in any return;

(b) “over-declarations of liability” means the aggregate of—

(i) the amount (if any) by which credit for input tax was understated in any return, and

(ii) the amount (if any) by which output tax was overstated in any return.

(3) Where, in relation to all such overstatements or understatements discovered by the taxable person during a prescribed accounting period, the difference between—

(a) under-declarations of liability, and

(b) over-declarations of liability,

does not exceed £50,000, the taxable person may correct his VAT account in accordance with this regulation.

But if Box 6 of the taxable person’s return for the prescribed accounting period must contain a total less than £5,000,000, the difference must not for these purposes exceed 1% of that total unless the difference is £10,000 or less.

(Box 6 must contain the total value of sales and all other outputs excluding any VAT– see regulations 25 and 25A and the relevant forms specified in a notice published by the Commissioners.)

(4) In the VAT payable portion—

(a) where the amount of any overstatements of output tax is greater than the amount of any understatements of output tax a negative entry shall be made for the amount of the excess; or

(b) where the amount of any understatements of output tax is greater than the amount of any overstatements of output tax a positive entry shall be made for the amount of the excess.

(5) In the VAT allowable portion—

(a) where the amount of any overstatements of credit for input tax is greater than the amount of any understatements of credit for input tax a negative entry shall be made for the amount of the excess; or

(b) where the amount of any understatements of credit for input tax is greater than the amount of any overstatements of credit for input tax a positive entry shall be made for the amount of the excess.

(6) Every entry required by this regulation shall—

(a) be made in that part of the VAT account which relates to the prescribed accounting period in which the overstatements or understatements in any earlier returns were discovered,

(b) make reference to the returns to which it applies, and

(7) Where the conditions referred to in paragraph (3) above do not apply, the VAT account may not be corrected by virtue of this regulation.

35

Where a taxable person has made an error—

(a) in accounting for VAT, or

(b) in any return made by him,

then, unless he corrects that error in accordance with regulation 34, he shall correct it in such manner and within such time as the Commissioners may require.

Notification of acquisition of goods subject to excise duty by non-taxable persons and payment of VAT

36

—

(1) Where—

(a) a taxable acquisition of goods subject to excise duty takes place in the United Kingdom,

(b) the acquisition is not in pursuance of a taxable supply, and

the person acquiring the goods shall notify the Commissioners of the acquisition at the time of the acquisition or the arrival of the goods in the United Kingdom, whichever is the later.

(2) The notification shall be in writing in the English language and shall contain the following particulars—

(a) the name and current address of the person acquiring the goods,

(b) the time of the acquisition,

(d) the value of the goods including any excise duty payable, and

(e) the VAT due upon the acquisition.

(3) The notification shall include a declaration, signed by the person who is required to make the notification, that all the information entered in it is true and complete.

(4) Any person required to notify the Commissioners of an acquisition of goods subject to excise duty shall pay the VAT due upon the acquisition at the time of notification and, in any event, no later than the last day on which he is required by this regulation to make such notification.

(5) Where a person required to make notification dies or becomes incapacitated and control of his assets passes to another person, being a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity, that other person shall, so long as he has such control, be required to make the notification referred to in this regulation, provided that the requirement to pay the VAT due upon the acquisition shall apply to that other person only to the extent of the assets of the deceased or incapacitated person over which he has control and, save to the extent aforesaid, this regulation shall apply to such person so acting in the same way as it would have applied to the deceased or incapacitated person had that person not been deceased or incapacitated.

Claims for recovery of overpaid VAT

37

Any claim under section 80 of the Act shall be made in writing to the Commissioners and shall, by reference to such documentary evidence as is in the possession of the claimant, state the amount of the claim and the method by which that amount was calculated.

Adjustments in the course of business

38

—

(1) ... This regulation applies where—

(a) there is an increase in consideration for a supply, or

(b) there is a decrease in consideration for a supply,

which includes an amount of VAT and the increase or decrease occurs after the end of the prescribed accounting period in which the original supply took place.

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

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

(1C) Where an increase or decrease in consideration relates to a supply in respect of which it is for the recipient, on the supplier’s behalf, to account for and pay the tax, the prescribed accounting period referred to in paragraph (1) is that of the recipient, and not the maker, of the supply.

But this paragraph does not apply to the circumstances referred to in regulation 38A.

(2) Where this regulation applies, both the taxable person who makes the supply and a taxable person who receives the supply shall adjust their respective VAT accounts in accordance with the provisions of this regulation.

(3) Subject to paragraph (3A) below, the maker of the supply shall—

(a) in the case of an increase in consideration, make a positive entry; or

(b) in the case of a decrease in consideration, make a negative entry,

for the relevant amount of VAT in the VAT payable portion of his VAT account.

(3A) Where an increase or decrease in consideration relates to a supply on which the VAT has been accounted for and paid by the recipient of the supply, any entry required to be made under paragraph (3) shall be made in the recipient’s VAT account and not that of the supplier.

(4) The recipient of the supply, if he is a taxable person, shall—

(a) in the case of an increase in consideration, make a positive entry; or

(b) in the case of a decrease in consideration, make a negative entry,

for the relevant amount of VAT in the VAT allowable portion of his VAT account.

(4A) In the case of an increase in consideration, no entry may be made under paragraph (4) unless the recipient of the supply holds the debit note which the supplier is required to provide under regulation 15C(2).

(5) Every entry required by this regulation must be made in that part of the VAT account which relates to the prescribed accounting period in which the increase in consideration or decrease in consideration occurs.

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

(7) None of the circumstances to which this regulation applies is to be regarded as giving rise to any application of regulations 34 and 35 except insofar as there is an error arising from a failure to make any entry required by this regulation.

(8) Paragraphs (4A) and (5) do not apply in cases where an adjustment in relation to an increase or decrease in consideration has been made in accordance with this regulation before 1st September 2019.

Calculation of returns

39

—

(1) Where a person is required by regulations made under the Act to make a return to the Controller, the amounts to be entered on that return shall be determined in accordance with this regulation and any further requirements that may be contained in a notice published by the Commissioners.

(2) In Box 1 shall be entered the aggregate of all the entries in the VAT payable portion of that part of the VAT account which relates to the prescribed accounting period for which the return is made... except that the total of the output tax due in that period on acquisitions of goods made in Northern Ireland from EU member States shall be entered instead in Box 2.

(3) In Box 4 shall be entered the aggregate of all the entries in the VAT allowable portion of that part of the VAT account which relates to the prescribed accounting period for which the return is made.

(4) Where any correction has been made and a return calculated in accordance with these Regulations then any such return shall be regarded as correcting any earlier returns to which regulations 34 and 35 apply.

VAT to be accounted for on returns and payment of VAT

40

(1) Any person making a return shall in respect of the period to which the return relates account in that return for—

(a) all his output tax,

(aa) all VAT which he is required to pay on behalf of the supplier.

(b) all VAT for which he is accountable by virtue of Part XVI of these Regulations,

(ba) all import VAT for which he is accounting on that return in accordance with the Value Added Tax (Accounting Procedures for Import VAT for VAT Registered Persons and Amendment) (EU Exit) Regulations 2019,

(c) all VAT which he is required to pay as a result of the removal of goods from a fiscal warehousing regime, or Northern Ireland fiscal warehousing regime, and

(d) all VAT which he is required to pay as a result of a supply of specified services (performed on or in relation to goods at a time when they are subject to a warehousing regime or Northern Ireland warehousing regime) being zero-rated under section 18C(1) of the Act where—

(i) that warehousing regime or Northern Ireland warehousing regime is one where goods are stored without payment of any duty of excise,

(ii) those goods are subject to a duty of excise,

(iii) those goods have been the subject of an acquisition from another member State and the material time for that acquisition was while those goods were subject to that warehousing regime or Northern Ireland warehousing regime, and,

(iv) there was no supply of those goods while they were subject to that warehousing regime or Northern Ireland warehousing regime.

The amounts to be entered on that return shall be determined in accordance with these Regulations.

(2) Any person required to make a return shall pay to the Controller such amount of VAT as is payable by him in respect of the period to which the return relates not later than the last day on which he is required to make that return.

(2A) Where a return is made or is required to be made in accordance with regulations 25 and 25A above using an electronic return system or a compatible software return system, the relevant payment to the Controller required by paragraph (2) above shall be made solely by means of electronic communications that are acceptable to the Commissioners for this purpose.

(2B) With effect from 1st April 2010, where a person makes any payment to the Controller required by paragraph (2) above by cheque (whether or not in contravention of paragraph (2A) above)—

(a) the payment shall be treated as made on the day when the cheque clears to the account of the Controller, and

(b) that shall be the day when payment of any VAT shown as due on the return is to be treated as received by the Commissioners for the purposes of section 59 of the Act.

(2C) For the purposes of this regulation, the day on which a cheque clears to the account of the Controller is the second business day following but not including the date of its receipt.

(2D) In this regulation a “business day” is any day except—

(a) Saturday, Sunday, Good Friday or Christmas Day;

(b) a bank holiday under the Banking and Financial Dealings Act 1971;

(d) a day declared by an order under section 2(1) of the Banking and Financial Dealings Act 1971 to be a non-business day.

(3) The requirements of paragraphs (1) or (2) above shall not apply where the Commissioners allow or direct otherwise.

(4) A direction under paragraph (3) may in particular allow additional time for a payment mentioned in paragraph (2) that is made by means of electronic communications.

The direction may allow different times for different means of payment.

(5) Later payment so allowed does not of itself constitute a default for the purposes of section 59 of the Act (default surcharge).

Accounting etc. by reference to the duty point, and prescribed accounting period in which VAT on certain supplies is to be treated as being chargeable

41

—

(1) Where in respect of—

(a) any supply by a taxable person of dutiable goods, or

(b) an acquisition by any person from another member State of dutiable goods,

the time of supply or acquisition, as the case may be, precedes the duty point in relation to those goods, the VAT in respect of that supply or acquisition shall be accounted for and paid, and any question as to the inclusion of any duty in the value of the supply or acquisition shall be determined, by reference to the duty point or by reference to such later time as the Commissioners may allow.

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

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

Accounting for VAT on the removal of goods

42

—

(1) This regulation applies—

(a) where goods have been removed—

(i) from Northern Ireland to a member State, or

(ii) from a member State to a different Member State or to Northern Ireland; and

(b) the removal falls within paragraph (f) or (g) of article 4 of the Removal Order.

(2) Except where paragraph (3) below applies in respect of the same prescribed accounting period, the owner shall not make any entry in the VAT payable portion of that part of his VAT account which relates to the prescribed accounting period in which he would be liable to account for any VAT chargeable in respect of the removal.

(3) Where—

(a) the condition described in article 5 of the Removal Order has not been complied with, and

(b) an amount of VAT has become payable,

the owner shall make a positive entry for the relevant amount of VAT in the VAT payable portion of that part of his VAT account which relates to the prescribed accounting period in which the condition was not complied with.

Goods removed from warehousing regime

43

—

(1) This regulation applies to a registered person who is an approved person within the meaning of the Excise Duties (Deferred Payment) Regulations 1992[^f00007] in respect of goods which are at a specified warehouse or Northern Ireland warehouse.

(2) Where a person to whom this regulation applies is—

(a) the person who is liable under section 18(4)(b) of , or paragraph 16(8) of Schedule 9ZB to, the Act to pay VAT on a supply of goods while the goods are subject to a warehousing regime or Northern Ireland warehousing regime, as the case may be, or

(b) liable under section 18D(2) of the Act to pay VAT on a supply of services to which section 18C(3) of the Act applies (specified services performed on or in relation to goods which are subject to a warehousing regime),

he may pay that VAT at or before the relevant time determined in accordance with paragraph (3) below instead of at the time provided for by sections 18(4)(b) or 18D(2)(a) of, or paragraph 16(8) of Schedule 9ZB to, the Act.

(3) For the purposes of paragraph (2) above the relevant time means—

(a) in relation to hydrocarbon oils, the 15th day of the month immediately following the month in which the hydrocarbon oils were removed from the warehousing regime;

(b) in relation to any other goods subject to a duty of excise, the day (payment day) on which the registered person is required to pay the excise duty on the goods in accordance with regulation 5 of the Excise Duties (Deferred Payment) Regulations 1992.

(4) Where any goods of a kind chargeable to a duty of excise qualify for any relief of that duty, that relief shall be disregarded for the purposes of determining the relevant time under paragraph (3) above.

PART VI — PAYMENTS ON ACCOUNT

Interpretation of Part VI

44

In this Part—

“body corporate” means a body corporate which is under a duty to make payments on account by virtue of the Value Added Tax (Payments on Account) Order 1993[^f00008] and “relevant division” means a division of a body corporate by reference to the business of which that body corporate is under such a duty;

“payments on account” has the same meaning as in the Value Added Tax (Payments on Account) Order 1993.

Payments on Account

45

Save in a case to which regulation 48 applies, the Commissioners shall give to a taxable person who is under a duty to make payments on account notification in writing of—

(a) the amounts that he is under a duty to pay,

(b) how those amounts have been calculated, and

46

Save in a case to which regulation 48 applies, if in respect of a prescribed accounting period the total amount of the payment on account made by the taxable person exceeds the amount of VAT due from him in respect of that period, the amount of excess shall be paid to him by the Commissioners if and to the extent that it is not required by section 81 of the Act to be set against any sum which he is liable to pay to them.

47

Where a taxable person fails to make a payment on account by the last day by which he is required to make it, that payment on account shall be recoverable as if it were VAT due from him.

48

—

(1) The Commissioners shall notify a relevant division in writing of—

(a) the amounts of the payments on account that the body corporate is under a duty to make by reference to the business of that division,

(b) how those amounts have been calculated, and

(2) If in respect of a prescribed accounting period the total amount of the payments on account made by a body corporate by reference to the business of a particular relevant division exceeds the amount of VAT due from the body corporate in respect of that period by reference to that business, the amount of the excess shall be paid to the body corporate through that division by the Commissioners if and to the extent that it is not required by section 81 of the Act to be set against any sum which the body corporate is liable to pay to them.

(3) Section 81 of the Act shall not require any amount which is due to be paid by the Commissioners to a body corporate under paragraph (2) above by reference to the business of a particular relevant division to be set against any sum due from the body corporate otherwise than by reference to that business or to the liabilities of the body corporate arising in connection with that division.

PART VII — ANNUAL ACCOUNTING

Interpretation of Part VII

49

In this Part—

“authorised person” means a person who has been authorised by the Commissioners in accordance with regulation 50(1), and “authorised” and “authorisation” shall be construed accordingly;

“transitional accounting period” means the period commencing on the first day of a person’s prescribed accounting period in which the Commissioners authorise him to use the scheme, and ending on the day immediately preceding the first day of that person’s first current accounting year, and is a prescribed accounting period within the meaning of section 25(1) of the Act;

“current accounting year” means the period of 12 months commencing on a date indicated by the Commissioners in their notification of authorisation of a person, or while a person remains authorised the most recent anniversary thereof, and is a prescribed accounting period within the meaning of section 25(1) of the Act;

“the scheme” means the annual accounting scheme established by regulations 50 and 51;

“credit transfer” means the transfer of funds from one bank account to another under a mandate given by the payer to the bank making the transfer;

“the quarterly sum” means—in the case of a taxable person who has been registered for at least 12 months—immediately preceding the first day of his current accounting year, orfor the purposes of regulation 51, immediately preceding the first day of his transitional accounting period,a sum equal to 25 per cent. of the total amount of VAT that he was liable to pay to the Commissioners in respect of those 12 months; orin any other case, a sum equal to 25 per cent. of the total amount of VAT that the Commissioners are satisfied he will be liable to pay to the Commissioners in respect of the next 12 months;

“the agreed quarterly sum” means a sum agreed with the Commissioners, not being less than 25 per cent of a taxable person’s estimated liability for VAT in his current accounting year;

“the monthly sum” means—in the case of a taxable person who has been registered for at least 12 months—immediately preceding the first day of his current accounting year, orfor the purposes of regulation 51, immediately preceding the first day of his transitional accounting period,a sum equal to 10 per cent. of the total amount of VAT that he was liable to pay to the Commissioners in respect of those 12 months; orin any other case, a sum equal to 10 per cent. of the total amount of VAT that the Commissioners are satisfied he will be liable to pay to the Commissioners in respect of the next 12 months;

“the agreed monthly sum” means a sum agreed with the Commissioners, not being less than 10 per cent of a taxable person’s estimated liability for VAT, in his current accounting year;

“working day” means any day of the week other than Saturday, Sunday, a bank holiday or a public holiday;

“relevant quarterly date” means the last working day of the fourth and, where a period has such months, the seventh and the tenth months of a transitional accounting period;

“relevant monthly date” means the last working day of the fourth and each successive month of a transitional accounting period.

Annual accounting scheme

50

(1) The Commissioners may, subject to the requirements of this Part, authorise a taxable person to pay and account for VAT by reference to any transitional accounting period, and any subsequent current accounting year at such times, and for such amounts, as may be determined in accordance with the scheme.

(2) A taxable person authorised to pay and account for VAT in accordance with the scheme shall—

(a) pay to the Commissioners by credit transfer—

(i) where the taxable person and Commissioners agree to such payment pattern, the quarterly sum, or as the case may be the agreed quarterly sum, no later than the last working day of each of the fourth, seventh and tenth months of his current accounting year;

(ii) in all other cases, the monthly sum, or as the case may be, the agreed monthly sum, in nine equal monthly instalments, commencing on the last working day of the fourth month of his current accounting year; and

(b) make by the last working day of the second month following the end of that current accounting year a return in respect of that year, together with any outstanding payment due to the Commissioners in respect of his liability for VAT for the current accounting year declared on that return.

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

Admission to the scheme

51

An authorised person shall, where in any given case the transitional accounting period is—

(a) 4 months or more—

(i) where the taxable person and Commissioners agree to such payment pattern, pay to the Commissioners by credit transfer on each relevant quarterly date the quarterly sum; or

(ii) in all other cases, pay to the Commissioners by credit transfer on each relevant monthly date the monthly sum; and

(iii) make by the last working day of the second month following the end of his transitional accounting period a return in respect of that period, together with any outstanding payment due to the Commissioners in respect of his liability for VAT declared on that return; or

(b) less than 4 months, make by the last working day of the first month following the end of his transitional accounting period a return in respect of that period, together with any outstanding payment due to the Commissioners in respect of his liability for VAT declared on that return.

52

(1) A taxable person shall be eligible to apply for authorisation under regulation 50(1) if—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) he has reasonable grounds for believing that the value of taxable supplies made or to be made by him in the period of 12 months beginning on the date of his application for authorisation will not exceed £1,350,000;

(d) his registration is not in the name of a division under section 46(1) of the Act; and

(e) he has not in the 12 months preceding the date of his application for authorisation ceased to operate the scheme.

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

(2) The Commissioners may refuse to authorise a person under regulation 50(1) where they consider it necessary to do so for the protection of the revenue.

53

(1) An authorised person shall continue to account for VAT in accordance with the scheme until he ceases to be authorised.

(2) An authorised person ceases to be authorised when—

(a) at the end of any transitional accounting period or current accounting year the value of taxable supplies made by him in that period or, as the case may be, year has exceeded £1,600,000; or

(b) his authorisation is terminated in accordance with regulation 54 below;

(i) becomes insolvent and ceases to trade, other than for the purpose of disposing of stocks and assets; or

(ii) ceases business or ceases to be registered; or

(iii) dies, becomes bankrupt or incapacitated;

(d) he ceases to operate the scheme of his own volition.

54

(1) The Commissioners may terminate an authorisation in any case where—

(a) a false statement has been made by or on behalf of an authorised person in relation to his application for authorisation; or

(b) an authorised person fails to make by the due date a return in accordance with regulation 50(2)(b) or regulation 51(a)(iii) or (b); or

(d) where they receive a notification in accordance with paragraph (2) below; or

(e) at any time during an authorised person’s transitional accounting period or current accounting year they have reason to believe, that the value of taxable supplies he will make during the period or as the case may be year, will exceed £1,600,000; or

(f) it is necessary to do so for the protection of the revenue; or

(g) an authorised person has not, in relation to a return made by him prior to authorisation, paid to the Commissioners all such sums shown as due thereon; or

(h) an authorised person has not, in relation to any assessment made under either section 73 or section 76 of the Act, paid to the Commissioners all such sums shown as due thereon.

(2) Where an authorised person has reason to believe that the value of taxable supplies made by him during a transitional accounting period or current accounting year will exceed £1,600,000, he shall within 30 days notify the Commissioners in writing.

Expulsion from the scheme

55

(1) The date from which an authorised person ceases to be authorised in accordance with Regulation 53(2) shall be —

(a) where regulation 53(2)(a) applies, the day following the last day of the relevant transitional accounting period or current accounting year;

(b) where regulation 53(2)(b) applies, the day on which the Commissioners terminate his authorisation;

(d) where regulation 53(2)(d) applies, the date on which the Commissioners are notified in writing of the authorised persons decision to cease using the scheme.

(2) Where an authorised person ceases to be authorised, he or as the case may be, his representative, shall—

(a) if his authorisation ceases before the end of his transitional accounting period or current accounting year, make a return within 2 months of the date specified in paragraph (1)(b), (1)(c) or (1)(d) above, together with any outstanding payment due to the Commissioners in respect of his liability for VAT for that part of the period or year arising before the date he ceased to be authorised; or

(b) if his authorisation ceases at the end of his transitional accounting period or current accounting year, make a return together with any outstanding payment due to the Commissioners in respect of his liability for VAT in accordance with regulation 51 or 50 above; and

in either case, from the day following the day on which he ceases to be authorised, account for and pay VAT as provided for otherwise than under this Part.

PART VIII — CASH ACCOUNTING

Interpretation of Part VIII

56

In this Part—

“money” means banknotes or coins;

“notice” means any notice published pursuant to this Part.

Cash accounting scheme

57

A taxable person may, subject to this Part and to such conditions as are described in a notice published by the Commissioners, account for VAT in accordance with a scheme (hereinafter referred to in this Part as “the scheme”) by which the operative dates for VAT accounting purposes shall be—

(a) for output tax, the day on which payment or other consideration is received or the date of any cheque, if later; and

(b) for input tax, the date on which payment is made or other consideration is given, or the date of any cheque, if later.

Admission to the scheme

58

(1) Without prejudice to paragraph (4) below, a taxable person shall be eligible to begin to operate the scheme from the beginning of any prescribed accounting period if—

(a) he has reasonable grounds for believing that the value of taxable supplies to be made by him in the period of one year then beginning will not exceed £1,350,000,

(b) he has made all returns which he is required to make, and has—

(i) paid to the Commissioners all such sums shown as due on those returns and on any assessments made either under section 76 of, or Schedule 11 to, the Act, or

(ii) agreed an arrangement with the Commissioners for any outstanding amount of such sums as are referred to in sub-paragraph (i) above to be paid in instalments over a specific period, and

(i) been convicted of any offence in connection with VAT,

(ii) made any payment to compound proceedings in respect of VAT under section 152 of the Customs and Excise Management Act 1979,

(iii) been assessed to a penalty under section 60 of the Act, or

(iv) by virtue of regulation 64(1), ceased to be entitled to continue to operate the scheme.

(2) The scheme shall not apply to—

(a) lease purchase agreements;

(b) hire purchase agreements;

(d) credit sale agreements;

(e) supplies where a VAT invoice is issued and full payment of the amount shown on the invoice is not due for a period in excess of 6 months from the date of the issue of the invoice; ...

(f) supplies of goods or services in respect of which a VAT invoice is issued in advance of the delivery or making available of the goods or the performance of the services as the case may be ; or

(g) supplies of goods or services in respect of which it is for the recipient, on the supplier’s behalf, to account for and pay the VAT.

(3) Sub-paragraph (2) (f) above shall not apply where goods have been delivered or made available in part or where services have been performed in part and the VAT invoice in question relates solely to that part of the goods which have been delivered or made available or that part of the services which have been performed.

(4) A person shall not be entitled to begin to operate the scheme if the Commissioners consider it is necessary for the protection of the revenue that he shall not be so entitled.

59

Without prejudice to the right of a person to withdraw from the scheme, the Commissioners may vary the terms of the scheme by publishing a fresh notice or publishing a notice which amends an existing notice.

60

(1) Without prejudice to regulation 64 below, a person shall withdraw from the scheme immediately at the end of a prescribed accounting period of his if the value of taxable supplies made by him in the period of one year ending at the end of the prescribed accounting period in question has exceeded £1,600,000.

(2) Subject to regulations 61 to 63 below a person may withdraw from the scheme at the end of any prescribed accounting period.

(3) The requirement in paragraph (1) above shall not apply where the Commissioners allow or direct otherwise.

61

(1) Subject to paragraph (2), a person who ceases to operate the scheme, either of his own volition or because the value of taxable supplies made by him exceeds the level provided for in regulation 60(1), must—

(a) settle up, or

(b) apply transitional arrangements.

(2) Where the value of taxable supplies made by a person in the period of three months ending at the end of the prescribed accounting period in which he ceased to operate the scheme has exceeded £1,350,000, he may not apply transitional arrangements.

(3) In paragraph (1)(a), “settle up” means account for and pay on a return made for the prescribed accounting period in which he ceased to operate the scheme—

(a) all VAT that he would have been required to pay to the Commissioners during the time when he operated the scheme, if he had not then been operating the scheme, minus

(b) all VAT accounted for and paid to the Commissioners in accordance with the scheme, subject to any adjustment for credit for input tax.

(4) In paragraph (1)(b), “apply transitional arrangements” means continue to operate the scheme in respect of his scheme supplies for 6 months after the end of the prescribed accounting period in which he ceased to operate the scheme.

(5) In paragraph (4), “scheme supplies” means supplies made and received while he operated the scheme that are not excluded from the scheme by virtue of regulation 57A or 58 or conditions described in a notice.

(6) Where a person chooses to apply transitional arrangements, he shall account for and pay on a return made for the first prescribed accounting period that ends 6 months or more after the end of the prescribed accounting period in which he ceased to operate the scheme—

(a) all VAT that he would have been required to pay to the Commissioners during the time when he operated the scheme, if he had not then been operating the scheme, minus

(b) all VAT accounted for and paid to the Commissioners in accordance with the scheme (including any VAT accounted for and paid because he applied transitional arrangements), subject to any adjustment for credit for input tax.

62

Where a person operating the scheme becomes insolvent he shall within 2 months of the date of insolvency account for VAT due on all supplies made and received up to the date of insolvency which has not otherwise been accounted for, subject to any credit for input tax.

63

—

(1) Where a person operating the scheme ceases business or ceases to be registered he shall within 2 months or such longer period as the Commissioners may allow, make a return accounting for, and pay, VAT due on all supplies made and received up to the date of cessation which has not otherwise been accounted for, subject to any adjustment for credit for input tax..

(2) Where a business or part of a business carried on by a person operating the scheme is transferred as a going concern and regulation 6(1) does not apply, the transferor shall within 2 months or such longer period as the Commissioners may allow, make a return accounting for, and pay, VAT due on all supplies made and received which has not otherwise been accounted for, subject to credit for input tax.

(3) Where a business carried on by a person operating the scheme is transferred in circumstances where regulation 6(1) applies, the transferee shall continue to account for and pay VAT as if he were a person operating the scheme on supplies made and received by the transferor prior to the date of transfer.

Withdrawal from the scheme

64

(1) A person shall not be entitled to continue to operate the scheme where—

(a) he has, while operating the scheme, been convicted of an offence in connection with VAT or has made a payment to compound such proceedings under section 152 of the Customs and Excise Management Act 1979,

(b) he has while operating the scheme been assessed to a penalty under section 60 of the Act,

(d) the Commissioners consider it necessary for the protection of the revenue that he shall not be so entitled.

(2) A person who, by virtue of paragraph (1) above, ceases to be entitled to continue to operate the scheme shall account for and pay on a return made for the prescribed accounting period in which he ceased to be so entitled—

(a) all VAT which he would have been required to pay to the Commissioners during the time when he operated the scheme, if he had not then been operating the scheme, less

(b) all VAT accounted for and paid to the Commissioners in accordance with the scheme, subject to any adjustment for credit for input tax.

Accounting

65

—

(1) Except in the circumstances set out in regulations 61 to 63, VAT shall be accounted for and paid to the Commissioners by the due date prescribed for the accounting period in which payment or other consideration for the supply is received.

(2) Input tax may be credited either in the prescribed accounting period in which payment or consideration for a supply is given, or in such later period as may be agreed with the Commissioners.

(3) A person operating the scheme shall obtain and keep for a period of 6 years, or such lesser period as the Commissioners may allow, a receipted and dated VAT invoice from any taxable person to whom he has made a payment in money in respect of a taxable supply, and in such circumstances a taxable person must on request provide such a receipted and dated VAT invoice.

(4) A person operating the scheme shall keep for a period of 6 years, or such lesser period as the Commissioners may allow, a copy of any receipt which he gives under paragraph (3) above.

PART IX — SUPPLIES BY RETAILERS

Interpretation of Part IX

66

In this Part—

“flat-rate trader” has the meaning given in regulation 55A;

“notice” means any notice or leaflet published by the Commissioners pursuant to this Part;

“scheme” means a method as referred to in regulation 67.

Retail schemes

67

—

(1) The Commissioners may permit the value which is to be taken as the value, in any prescribed accounting period or part thereof, of supplies by a retailer which are taxable at other than the zero rate to be determined by a method agreed with that retailer or by any method described in a notice published by the Commissioners for that purpose; and they may publish any notice accordingly.

(2) The Commissioners may vary the terms of any method by—

(a) publishing a fresh notice,

(b) publishing a notice which amends an existing notice, or

68

The Commissioners may refuse to permit the value of taxable supplies to be determined in accordance with a scheme if it appears to them—

(a) that the use of any particular scheme does not produce a fair and reasonable valuation during any period,

(b) that it is necessary to do so for the protection of the revenue, or

(c) that the retailer could reasonably be expected to account for VAT in accordance with regulations made under paragraph 2(1) of Schedule 11 to the Act.

69

No retailer may at any time use more than one scheme except as provided for in any notice or as the Commissioners may otherwise allow.

Notification of use of a scheme

70

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

Changing schemes

71

(1) Save as the Commissioners may otherwise allow, a retailer who accounts for VAT on the basis of taxable supplies valued in accordance with any scheme shall, so long as he remains a taxable person, continue to do so for a period of not less than one year from the adoption of that scheme by him, and any change by a retailer from one scheme to another shall be made at the end of any complete year reckoned from the beginning of the prescribed accounting period in which he first adopted the scheme.

(2) Paragraph (1) shall not apply where a retailer ceases to operate a scheme solely because he becomes a flat-rate trader.

Ceasing to use a scheme

72

—

(1) A retailer shall notify the Commissioners before ceasing to account for VAT on the basis of taxable supplies valued in accordance with these regulations.

(2) A retailer may be required to pay VAT on such proportion as the Commissioners may consider fair and reasonable of any sums due to him at the end of the prescribed accounting period in which he last used a scheme.

Supplies under Schedule 8, Group 1

73

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

Supplies under Schedule 8, Group 12

74

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

Change in VAT

75

Where pursuant to any enactment there is a change in the VAT charged on any supply, including a change to or from no VAT being charged on such supply, a retailer using any scheme shall take such steps relating to that scheme as are directed in any notice applicable to him or as may be agreed between him and the Commissioners.

PART X — TRADING STAMPS

Interpretation of Part X

76

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

Trading stamp scheme

77

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

78

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

79

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

80

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

PART XI — TIME OF SUPPLY AND TIME OF ACQUISITION

Goods for private use and free supplies of services

81

—

(1) Where the services referred to in paragraph 5(4) of Schedule 4 to the Act are supplied for any period, they shall be treated as being supplied on the last day of the supplier’s prescribed accounting period, or of each such accounting period, in which the goods are made available or used.

(2) Where services specified in an order made by the Treasury under section 5(4) of the Act are supplied for any period, they shall be treated as being supplied on the last day of the supplier’s prescribed accounting period, or of each such accounting period, in which the services are performed.

Services from outside the United Kingdom

82

(1) This paragraph applies to services which are treated as being made by a person under section 8(1) of the Act which are not services to which paragraph (3) below applies.

(2) Subject to paragraphs (5) and (7) below, the services to which paragraph (1) above applies shall be treated as being made when they are performed.

(3) This paragraph applies to services which are treated as being made by a person under section 8(1) of the Act and which are supplied for a period for a consideration the whole or part of which is determined or payable periodically or from time to time.

(4) Subject to paragraphs (5), (6) and (7) below, services to which paragraph (3) above applies shall be treated as separately and successively made at the end of the periods in respect of which payments are made or invoices issued and to the extent covered by the relevant payment or invoice.

(5) Where—

(a) in the case of a supply of services to which paragraph (1) above applies, a payment is made in respect of the supply before the time applicable under paragraph (2) above , or

(b) in the case of services to which paragraph (3) above applies, either—

(i) a payment is made at a time that is earlier than the end of the period to which it relates, or

(ii) a payment is made which is not made in respect of any identified period, or

(i) which are performed on or before 31st December 2009, or

(ii) in respect of which a period as described in paragraph (4) above has ended on or before that date, or

(iii) which the recipient has received the benefit of on or before that date,

the services shall be treated as being made at the time the payment is made.

(6) Where the supply of services to which paragraph (3) above applies—

(a) commences before 1st January and continues after 31st December of any year, and

(b) during that year no invoice is issued that has effect for the purposes of paragraph (4) above, and

the services supplied during that year shall be treated as being supplied on the 31st December of that year to the extent that the recipient has received the benefit of them.

(7) Services for which the consideration is not in money and which have been supplied during a period which—

(a) commences on the day following the last day of the last complete prescribed accounting period in 2009 which is applicable to the recipient of the services, and

(b) ends on 31st December 2009,

shall be treated as being supplied on 31st December 2009.

Time of acquisition

83

Where the time that goods are acquired from another member State falls to be determined in accordance with paragraph 4(1)(b) of Schedule 9ZA to the Act by reference to the day of the issue, in respect of the transaction in pursuance of which the goods are acquired, of an invoice of such description as the Commissioners may by regulations prescribe, the invoice shall be one which is issued by the supplier or the customer and which, in either case, is issued under the provisions of the law of the member State where the goods were supplied, corresponding in relation to that member State to the provisions of regulations 13, 13A and 14.

Supplies of land—special cases

84

—

(1) Where by or under any enactment an interest in, or right over, land is compulsorily purchased and, at the time determined in accordance with section 6(2) or (3) of the Act, the person (the grantor) from whom it is purchased does not know the amount of payment that he is to receive in respect of the purchase then goods or, as the case may require, services shall be treated as supplied each time the grantor receives any payment for the purchase.

(2) Subject to paragraphs (3) to (5) where a person (the grantor) grants or assigns the fee simple in any land, and at the time of the grant or assignment, the total consideration for it is not determinable, then goods shall be treated as separately and successively supplied at the following times—

(a) the time determined in accordance with section 6(2), (4), (5), (6)... or (10) of the Act, as the case may require, and

(b) the earlier of the following times—

(i) each time that any part of the consideration which was not determinable at the time mentioned in sub-paragraph (a) above is received by the grantor, or

(ii) each time that the grantor issues a VAT invoice in respect of such a part.

(3) Paragraph (2) above shall not apply in relation to a grant or assignment falling within item 1(a) of Group 1 of Schedule 9 to the Act where any of the persons specified in paragraph (4) below intend or expect to occupy the land on a date before a date ten years after completion of the building or civil engineering work on the land, without being in occupation of it wholly, or substantially wholly, for eligible purposes.

(4) The persons referred to in paragraph (3) above are—

(a) the grantor;

(b) any person who, with the intention or in the expectation that occupation of the land on a date before a date ten years after completion of the building or civil engineering work would not be wholly, or substantially wholly, for eligible purposes—

(i) provides finance for the grantor’s development of the land, or

(ii) has entered into any agreement arrangement or understanding (whether or not legally enforceable) to provide finance for the grantor’s development of the land;

(5) For the purposes of this regulation—

(a) Note (2) to Group 1 of Schedule 9 to the Act shall apply in determining when a building or civil engineering work is completed;

(b) paragraph 16 of Schedule 10 to the Act shall have effect for determining the meaning of “eligible purposes” and “occupation”;

(ba) whether a person’s occupation is “wholly, or substantially wholly,” for eligible purposes shall be determined in the same way as it is for the purposes of paragraph 15 of that Schedule;

(c) “the grantor’s development of the land” means any acquisition by the grantor of an interest in the land, building or civil engineering work and includes the construction of the building or civil engineering work;

(d) “providing finance” has the same meaning as in paragraph 14(3) of Schedule 10 to the Act, subject to any appropriate modifications, but does not include paying the consideration for the grantor’s grant or assignment within paragraph (3) above;

(e) any question whether one person is connected with another shall be determined in accordance with section 839 of the Taxes Act; but this is subject to sub-paragraph (f);

(f) a company is not connected with another company only because both are under the control of—

(i) the Crown,

(ii) a Minister of the Crown,

(iii) a government department, or

(iv) a Northern Ireland department;

(g) “company” and “control” have the same meaning as in section 839 of the Taxes Act.

Leases treated as supplies of goods

85

—

(1) Subject to paragraph (2) below, where the grant of a tenancy or lease is a supply of goods by virtue of paragraph 4 of Schedule 4 to the Act, and the whole or part of the consideration for that grant is payable periodically or from time to time, goods shall be treated as separately and successively supplied at the earlier of the following times—

(a) each time that a part of the consideration is received by the supplier, or

(b) each time that the supplier issues a VAT invoice relating to the grant.

(2) Where in respect of the grant of a tenancy or lease such as is mentioned in paragraph (1) above the supplier, at or about the beginning of any period not exceeding one year, issues a VAT invoice containing, in addition to the particulars specified in regulation 14, the following particulars—

(a) the dates on which any parts of the consideration are to become due for payment in the period,

(b) the amount payable (excluding VAT) on each such date, and

(c) the rate of VAT in force at the time of the issue of the VAT invoice and the amount of VAT chargeable in accordance with that rate on each of such payments,

goods shall be treated as separately and successively supplied each time that a payment in respect of the tenancy or lease becomes due or is received by the supplier, whichever is the earlier.

(3) Where, on or before any of the dates that a payment is due as stated on an invoice issued as described in paragraph (2) above, there is a change in the VAT chargeable on supplies of the description to which the invoice relates, that invoice shall cease to be treated as a VAT invoice in respect of any such supplies for which payments are due after the change (and not received before the change).

Supplies of water, gas or any form of power, heat, refrigeration or ventilation

86

—

(1) Except in relation to a supply to which sub-paragraphs (1) and (2) of paragraph 28 of Schedule 9ZB to the Act apply, and subject to paragraphs (2) and (3) below, a supply of—

(a) water other than—

(i) distilled water, deionised water and water of similar purity, and

(ii) water comprised in any of the excepted items set out in Group 1 of Schedule 8 to the Act, or

(b) coal gas, water gas, producer gases or similar gases, or

(d) any form of power, heat, refrigeration or other cooling, or ventilation,

shall be treated as taking place each time that a payment in respect of the supply is received by the supplier, or a VAT invoice relating to the supply is issued by the supplier, whichever is the earlier.

(2) Subject to paragraph (3) below, where the whole or part of the consideration for a supply such as is described in paragraph (1)(a), (b) or (c) above or of power in the form of electricity is determined or payable periodically or from time to time, goods shall be treated as separately and successively supplied at the earlier of the following times—

(a) each time that a part of the consideration is received by the supplier, or

(b) each time that the supplier issues a VAT invoice relating to the supply.

(3) Where separate and successive supplies as described in paragraph (2) above are made under an agreement which provides for successive payments, and the supplier at or about the beginning of any period not exceeding one year, issues a VAT invoice containing, in addition to the particulars specified in regulation 14, the following particulars—

(a) the dates on which payments under the agreement are to become due in the period,

(b) the amount payable (excluding VAT) on each such date, and

(c) the rate of VAT in force at the time of issue of the VAT invoice and the amount of VAT chargeable in accordance with that rate on each of such payments,

goods shall be treated as separately and successively supplied each time that payment in respect of the supply becomes due or is received by the supplier, whichever is the earlier.

(4) Where, on or before any of the dates that a payment is due as stated on an invoice issued as described in paragraph (3) above, there is a change in the VAT chargeable on supplies of the description to which the invoice relates, that invoice shall cease to be treated as a VAT invoice in respect of any such supplies for which payments are due after the change (and not received before the change).

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

Acquisitions of water, gas or any form of power, heat, refrigeration or ventilation

87

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

Supplier’s goods in possession of buyer

88

—

(1) Except in relation to a supply mentioned in section 6(2)(c) of the Act, or to a supply to which sub-paragraphs (1) and (2) of paragraph 28 of Schedule 9ZB to the Act apply, where goods are supplied under an agreement whereby the supplier retains the property therein until the goods or part of them are appropriated under the agreement by the buyer and in circumstances where the whole or part of the consideration is determined at that time, a supply of any of the goods shall be treated as taking place at the earliest of the following dates—

(a) the date of appropriation by the buyer,

(b) the date when a VAT invoice is issued by the supplier, or

(2) If, within 14 days after appropriation of the goods or part of them by the buyer as mentioned in paragraph (1) above, the supplier issues a VAT invoice in respect of goods appropriated or a self-billed invoice fulfilling the conditions in regulation 13(3A) is issued by the customer, the provisions of section 6(5) of the Act shall apply to that supply.

Retention payments

89

Where any contract (other than one of a description falling within regulation 93 below) for the supply of goods (other than for a supply to which sub-paragraphs (1) and (2) of paragraph 28 of Schedule 9ZB to the Act apply) or for the supply of services provides for the retention of any part of the consideration by a person pending full and satisfactory performance of the contract, or any part of it, by the supplier, goods or services (as the case may require) shall be treated as separately and successively supplied at the following times—

(a) the time determined in accordance with section 6(2), (3), (4), (5), (6), ... (10) or (13) of the Act, as the case may require, and

(b) the earlier of the following times—

(i) the time that a payment in respect of any part of the consideration which has been retained, pursuant to the terms of the contract, is received by the supplier, or

(ii) the time that the supplier issues a VAT invoice relating to any such part.

Continuous supplies of services

90

—

(1) Subject to paragraph (2) below, where services , except those to which regulation 93 applies, are supplied for a period for a consideration the whole or part of which is determined or payable periodically or from time to time, they shall be treated as separately and successively supplied at the earlier of the following times—

(a) each time that a payment in respect of the supplies is received by the supplier, or

(b) each time that the supplier issues a VAT invoice relating to the supplies.

(2) Where separate and successive supplies of services as described in paragraph (1) above are made under an agreement which provides for successive payments, and the supplier at or about the beginning of any period not exceeding one year, issues a VAT invoice containing, in addition to the particulars specified in regulation 14, the following particulars—

(a) the dates on which payments under the agreement are to become due in the period,

(b) the amount payable (excluding VAT) on each such date, and

(c) the rate of VAT in force at the time of issue of the VAT invoice and the amount of VAT chargeable in accordance with that rate on each of such payments,

services shall be treated as separately and successively supplied each time that a payment in respect of them becomes due or is received by the supplier, whichever is the earlier.

(3) Where, on or before any of the dates that a payment is due as stated on an invoice issued as described in paragraph (2) above, there is a change in the VAT chargeable on supplies of the description to which the invoice relates, that invoice shall cease to be treated as a VAT invoice in respect of any such supplies for which payments are due after the change (and not received before the change).

(4) This regulation shall not apply to any relevant services—

(a) where the period to which a payment falling within paragraph (1), (2) or (3) above relates, ends before 1st July 1997; or

(b) which are treated as supplied on 1st July 1997 by virtue of regulation 90A below.

(5) In this regulation and in regulations 90A and 90B below, “relevant services” means services within the description contained in paragraph 7A of Schedule 5 to the Act which are treated as supplied in the United Kingdom by virtue of article 18 of the Value Added Tax (Place of Supply of Services) Order 1992.

Royalties and similar payments

91

Where the whole amount of the consideration for a supply of services was not ascertainable at the time when the services were performed and subsequently the use of the benefit of those services by a person other than the supplier gives rise to any payment of consideration for that supply which is—

(a) in whole or in part determined or payable periodically or from time to time or at the end of any period,

(b) additional to the amount, if any, already payable for the supply, and

a further supply shall be treated as taking place each time that a payment in respect of the use of the benefit of those services is received by the supplier or a VAT invoice is issued by the supplier, whichever is the earlier.

Supplies of services by barristers and advocates

92

Services supplied by a barrister, or in Scotland, by an advocate, acting in that capacity, shall be treated as taking place at whichever is the earliest of the following times—

(a) when the fee in respect of those services is received by the barrister or advocate,

(b) when the barrister or advocate issues a VAT invoice in respect of them, or

Supplies in the construction industry

93

(1) Where services, or services together with goods, are supplied in the course of the construction, alteration, demolition, repair or maintenance of a building or any civil engineering work under a contract which provides for payment for such supplies to be made periodically or from time to time, those services or goods and services shall be treated as separately and successively supplied at the earliest of the following times–

(a) each time that a payment is received by the supplier,

(b) each time that the supplier issues a VAT invoice, or

(c) where the services are services to which paragraph (2) below applies, to the extent that they have not already been treated as supplied by virtue of sub-paragraphs (a) and (b) above–

(i) if the services were performed on or after 9th December 1997 and before 9th June 1999, the day which falls eighteen months after the date on which those services were performed, or

(ii) if the services are performed on or after 9th June 1999, the day on which the services are performed.

(2) This paragraph applies if, at the time the services were, or as the case may require, are performed–

(a) it was, or as the case may require, is the intention or expectation of–

(i) the supplier, or

(ii) a person responsible for financing the supplier’s cost of supplying the services or services together with goods,

that relevant land would, or as the case may require, will become (whether immediately or eventually) exempt land or, as the case may be, continue (for a period at least) to be such land, or

(b) the supplier had, or as the case may require, has received (and used in making his supply) any supply of services or of services together with goods the time of supply of which–

(i) was, or

(ii) but for the issue by the supplier of those services or services together with goods of a VAT invoice (other than one which has been paid in full), would have been,

determined by virtue of paragraph (1)(c) above.

(3) For the purposes of this regulation “relevant land” is land on which the building or civil engineering work to which the construction services relate is, or as the case may be, was situated.

(4) In this regulation references to a person’s being responsible for financing the supplier’s cost of supplying the services or goods and services are references to his being a person who, with the intention or in the expectation that relevant land will become, or continue (for a period at least) to be, exempt land–

(a) has provided finance for the supplier’s cost of supplying the services or services together with goods, or

(b) has entered into any agreement, arrangement or understanding (whether or not legally enforceable) to provide finance for the supplier’s cost of supplying the services or services together with goods.

(5) In this regulation references to providing finance for the supplier’s cost of supplying services or services together with goods are references to doing any one or more of the following, that is to say–

(a) directly or indirectly providing funds for meeting the whole or any part of the supplier’s cost of supplying the services or services together with goods,

(b) directly or indirectly procuring the provision of such funds by another,

(c) directly or indirectly providing funds for discharging, in whole or in part any liability that has been or may be incurred by any person for or in connection with the raising of funds to meet the supplier’s cost of supplying the services or services together with goods,

(d) directly or indirectly procuring that any such liability is or will be discharged, in whole or in part, by another.

(6) The references in paragraph (5) above to the provision of funds for a purpose referred to in that paragraph include references to–

(a) the making of a loan of funds that are or are to be used for that purpose,

(b) the provision of any guarantee or other security in relation to such a loan,

(c) the provision of any of the consideration for the issue of any shares or other securities issued wholly or partly for raising those funds, or

(d) any other transfer of assets or value as a consequence of which any of those funds are made available for that purpose,

but do not include references to funds made available to the supplier by paying to him the whole or any part of the consideration payable for the supply of the services or services together with goods.

(7) In this regulation references to the supplier’s cost of supplying the services or services together with goods are to–

(a) amounts payable by the supplier for supplies to him of services or of goods used or to be used by him in making the supply of services or of services together with goods, and

(b) the supplier’s staff and other internal costs of making the supply of services or of services together with goods.

(8) For the purposes of this regulation relevant land is exempt land if–

(a) the supplier,

(b) a person responsible for financing the supplier’s cost of supplying the services or goods and services, or

(c) a person connected with the supplier or with a person responsible for financing the supplier’s cost of supplying the services or goods and services,

is in occupation of the land without being in occupation of it wholly or mainly for eligible purposes.

(9) For the purposes of this regulation, but subject to paragraphs (11) and (13) below, a person’s occupation at any time of any land is not capable of being occupation for eligible purposes unless he is a taxable person at that time.

(10) Subject to paragraphs (11) and (13) below, a taxable person in occupation of any land shall be taken for the purposes of this regulation to be in occupation of that land for eligible purposes to the extent only that his occupation of that land is for the purpose of making supplies which–

(a) are or are to be made in the course or furtherance of a business carried on by him, and

(b) are supplies of such a description that any input tax of his which was wholly attributable to those supplies would be input tax for which he would be entitled to credit.

(11) For the purposes of this regulation–

(a) occupation of land by a body to which section 33 of the Act applies is occupation of the land for eligible purposes to the extent that the body occupies the land for purposes other than those of a business carried on by that body, and

(b) any occupation of land by a government department (within the meaning of section 41 of the Act) is occupation of the land for eligible purposes.

(12) For the purposes of this regulation, where land of which a person is in occupation–

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