The Value Added Tax (Cars) Order 1992

Explanatory Note

(This note is not part of the Order)

Under the directive of the Council of the European Communities dated 17th May 1977, No. 77/388/EEC (O.J. No. L145, 13.6.1977, p.1) as amended by the directive of that Council dated 16th December 1991, No. 91/680 EEC (O.J. No. L376, 31.12.1991, p.1), as from 1st January 1993 goods removed to the United Kingdom from another member State of the European Communities will no longer be chargeable to tax on importation. However, such goods may become chargeable to tax on their acquisition in the United Kingdom. Goods imported into the United Kingdom from a place outside the member states will continue to be chargeable to tax on their importation.

This Order revokes and re-enacts, with amendments, the provisions specified in the Schedule. The amendments are made in consequence of the new charging event arising from an acquisition of goods from another member state.

Article 4 re-enacts, with amendments, article 7 of the Valued Added Tax (Cars) Order 1980 (No. 442) (the 1980 Order), by excluding from the scope of the tax, disposals by finance houses and insurers of used motor cars in specified circumstances, and disposals without consideration of any motor car (including one acquired from another member State) in relation to which deduction of input tax has been disallowed.

Articles 5 and 6 re-enact, with amendments, article 5(1) to (3) and article 5(3A) respectively of the 1980 Order. They each provide for circumstances where a person is to be treated as supplying a motor car (which might be one acquired from another member State) both to himself and by himself.

Article 7 re-enacts article 5(4) of the 1980 Order by applying articles 5 and 6 to bodies corporate which are treated as members of a group.

Article 8 re-enacts, with amendments, article 6 of the 1980 Order. It provides for the tax chargeable on the supply of a used motor car (including one acquired from another member state) to be, subject to specified conditions, chargeable by reference to the excess (if any) of the consideration for which the car is supplied over the cost of its purchase plus (in the case of a car acquired from another member State or imported from a place outside the member States) the tax chargeable on its acquisition or importation.