The Value Added Tax (General) (Amendment) Regulations 1992

Explanatory Note

(This note is not part of the Regulations)

These Regulations substitute a new Part V and amend Parts VA and VI of the Value Added Tax (General) Regulations 1985 (“the principal Regulations”).

In respect of Parts V and VA, these provisions reflect the requirements of Title XI of Council Directive 77/388/EEC (OJ No. L145, 13.6.77, p.1).

In respect of Part VI, regulations 53 and 55 of the principal Regulations, as amended by these Regulations, implement the requirements of Articles 6, 7 and 7b of Council Directive 69/169/EEC (OJ No. L133, 4.6.69, p.6 (OJ/SE 1969(I) p.232)) as amended by Council Directives 72/230/EEC (OJ No. L139, 17.6.72, p.28 (OJ/SE 1972(II) p.565)), 78/1032/EEC (OJ No. L366, 28.12.78, p.28), 85/348/EEC (OJ No. L183, 16.7.85, p.24), 88/664/EEC (OJ No. L382, 31.12.88, p.41), 89/194/EEC (OJ No. L73, 17.3.89, p.47), 91/191/EEC (OJ No. L94, 16.4.91, p.24) and 91/673/EEC (OJ No. L373, 31.12.91, p.33).

Under regulation 1, regulations 6 and 7 (which amend Part VI) come into force on1 April 1992 and regulations 3, 4 and 5 (which amend Parts V and VA) become effective on the first day of tax years beginning on or after 1 April 1992.

Regulation 3 substitutes a new Part V of the principal Regulations. This Part deals with the allowance of input tax, and the rules governing partial exemption. The main amendments are:

• the new regulation 29 redefines the terms “exempt input tax” and “tax year”. The Commissioners are also empowered to approve or direct that a tax year shall be a period other than twelve months, or commence on a date other than that provided in the new regulation 29(1)(c);

• the new regulation 30 prescribes a new method of attributing input tax to taxable supplies. This is the only method which may be used by taxable persons without the prior approval of the Commissioners;

• the new regulation 31 authorises the Commissioners to approve or direct the use by taxable persons of methods other than that prescribed in new regulation 30. It also empowers the Commissioners to direct the termination of use of such methods;

• new regulation 33(1) is qualified by new regulations 33(2), 33(3) and 33(4). It enables input tax attributable to certain exempt supplies to be treated as attributable to taxable supplies;

• new regulation 33(2) disapplies new regulation 33(1) where the supply is made in the course of carrying on one of the businesses stipulated, or a business similar to such businesses;

• new regulation 33(3) applies to taxable persons who carry on one or more of the businesses stipulated in new regulation 33(2), and who also carry on one or more businesses not so stipulated. New regulation 33(1) can apply to them if the supply is made exclusively in the course of carrying on a business not stipulated in new regulation 33(2);

• new regulation 33(4) disapplies new regulation 33(1) where the exempt input tax of the taxable person, excluding any attributable to the supplies listed in new regulation 33(1), exceeds the de minimis limit in new regulation 33A;

• new regulation 33A introduces a new single de minimis limit;

• new regulation 35 provides for adjustments where input tax has been deducted because the taxable person intended to use the goods or services in making taxable supplies, or both taxable and exempt supplies, and in the event uses, or forms an intention to use, them in making exempt supplies, or (where only taxable supplies were originally intended) both taxable and exempt supplies;

• new regulation 36 deals with the converse of the situation covered by new regulation 35, and provides for payments to be made to taxable persons;

• new regulation 37 no longer contains regulation 37(2)(d).

Regulations 4 and 5 of these Regulations amend Part VA of the principal Regulations. This is the Part which deals with adjustments of input tax deducted in respect of capital goods. The changes are:

• regulation 37A(1) has been amended as a consequence of the redefinition of “tax year” in the new regulation 29 in Part V;

• regulation 37E(1) has been substituted by a deeming provision for the calculation of the extent to which capital goods are used in making taxable supplies in subsequent intervals.

Regulations 6 and 7 of these Regulations amend regulation 53 and 55 of the principal Regulations to provide revised minimum values of goods that can be purchased under the retail export schemes by travellers to the Republic of Ireland.