The Value Added Tax (Amendment) (No. 4) Regulations 2002

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 1st January 2003, further amend the Value Added Tax Regulations 1995 (S.I. 1995/2518) (“the principal Regulations”).

Regulation 3 amends regulation 166A of the principal Regulations so that the requirement for a person who has claimed bad debt relief to send a notice to his customer notifying him of the claim only applies where the supply upon which the claim is based was made before 1st January 2003.

Regulation 5 inserts a new regulation 170A into the principal Regulations. This applies where a person makes a supply of goods and an associated supply of credit under a hire purchase, conditional sale or credit sale agreement. It provides for a method of attributing to each supply any payments received in relation to those supplies. Regulations 4 and 6 make consequential amendments to regulations 170 and 171, respectively, of the principal Regulations.

Regulation 7 inserts a new regulation 172ZC into the principal Regulations. This provides that Part XIXA of the principal Regulations (Repayment of input tax where claim made under Part XIX) only applies where the supply upon which the claim was based was made before 1st January 2003.

Regulation 8 introduces new Part XIXB to the principal Regulations with additional regulations 172F to 172J.

The new regulation 172F provides that the new Part XIXB only applies where the supply in relation to which a person has claimed credit for input tax was made on or after 1st January 2003.

The new regulation 172G defines “relevant period” for the purposes of the new Part XIXB as 6 months following the date of the supply or, if later, the date on which the consideration for the supply (or the unpaid part of it) became payable.

The new regulation 172H provides for the repayment of input tax where a person has claimed VAT on a supply as input tax but has not paid the whole or any part of the consideration for the supply by the end of the relevant period.

The new regulation 172I provides for the restoration of an entitlement to credit for input tax where a person has repaid input tax in accordance with regulation 172H and, after the end of the relevant period, pays the whole or part of the consideration for the supply in relation to which the repayment was made.

The new regulation 172J applies the rules on the attribution of payments in regulation 170 of the principal Regulations or, as the case may be, 170A in order to determine whether anything paid is paid by way of consideration for a particular supply.