The Value Added Tax (Amendment) (No.3) Regulations 1997

11.  Regulation 114 shall be amended as follows—

(a) in paragraph (3)—

(i) in sub-paragraph (b) after the words “part of the building” there shall be inserted “or civil engineering work or part of the civil engineering work”; and

(ii) for the words “paragraphs (4) to (7)” there shall be substituted “paragraphs (4) to (5B) and (7)”;

(b) in paragraph (4)—

(i) for the words “paragraphs (6) and (7)” there shall be substituted “paragraphs (5A), (5B) and (7)”; and

(ii) in sub-paragraph (e) for the words “(e) or (f)” there shall be substituted “(e), (f), (g) or (h)” and after the words “the building or the altered building or the extension or annex” there shall be inserted “or the civil engineering work or the building which has been refurbished or fitted out”;

(c) in paragraph (5) for the words “paragraphs (6) and (7)” there shall be substituted “paragraphs (5A), (5B) and (7)”;

(d) after paragraph (5) there shall be inserted—

“(5A) On the first occasion during the period of adjustment applicable to a capital item that the owner of the item—

(a) being a registered person subsequently becomes a member of a group under section 43 of the Act;

(b) being a member of a group under section 43 ceases to be a member of that group (whether or not he becomes a member of another such group immediately thereafter); or

(c) transfers the item in the course of the transfer of his business or part of his business as a going concern (the item therefore not being treated as supplied) in circumstances where the new owner is not, under regulation 6(1) above, registered with the registration number of and in substitution for the transferor,

the interval then applying shall end on the day before he becomes a member of a group or the day that he ceases to be a member of the group or transfers the business or part of the business (as the case may require) and thereafter each subsequent interval (if any) applicable to the capital item shall end on the successive anniversaries of that day.

(5B) Where the extent to which a capital item is used in making taxable supplies does not change between what would, but for this paragraph, have been the first interval and the first subsequent interval applicable to it and the length of the two intervals taken together does not exceed 12 months the first interval applicable to the capital item shall end on what would have been the day that the first subsequent interval expired.”;

(e) paragraph (6) shall be omitted; and

(f) for paragraph (7) there shall be substituted—

“(7) Where the owner of a capital item transfers it during the period of adjustment applicable to it in the course of the transfer of his business or a part of his business as a going concern (the item therefore not being treated as supplied) and the new owner is, under regulation 6(1) above, registered with the registration number of, and in substitution for the transferor, the interval applying to the capital item at the time of the transfer shall end on the last day of the longer period applying to the new owner immediately after the transfer or, if no longer period then applies to him, shall end on the last day of his tax year following the day of transfer.”.