The Value Added Tax (Special Provisions) Order 1995

Relief for certain goods U.K.

12.—(1) Without prejudice to article 13 below and subject to complying with such conditions as the Commissioners may direct in a notice published by them for the purposes of this Order or may otherwise direct and subject to paragraph (4) below, where a person supplies goods of a description in paragraph (2) below, of which he took possession in any of the circumstances set out in paragraph (3) below, he may opt to account for the VAT chargeable on the supply on the profit margin(1) on the supply instead of by reference to its value.

(2) The supplies referred to in paragraph (1) above are supplies of—

(a) works of art, antiques and collectors' items;

(b) second-hand goods.

(3) The circumstances mentioned in paragraph (1) above are—

[F1 (a) [F2 subject to paragraph (aa),] that the taxable person took possession of the goods pursuant to—

(i) a supply in respect of which no VAT was chargeable under the Act or under Part I of the Manx Act;

(ii) a supply on which VAT was chargeable on the profit margin in accordance with paragraph (1) above or a corresponding provision made under the Manx Act or a corresponding provision of the law of [F3 a member State][F4 where the goods are removed to Northern Ireland];

[F5 (iii) a de-supplied transaction, other than an article 5 transaction;

(iv) subject to paragraph (3A) below, an article 5 transaction;]

(v) (if the goods are a work of art) a supply to the taxable person by, or an acquisition from [F3 a member State] by him from its creator or his successor in title;]

[F6 (aa) but the circumstances in sub-paragraph (a) do not apply if the person took possession of the goods in Great Britain or the Isle of Man and the goods are removed to Northern Ireland.]

(b) (if the goods are a work of art, an antique or a collectors' item) that they were imported by the taxable person himself [F7 , which includes – if the taxable person is an auctioneer – the auctioneer having placed them in—

[F8 (i) a temporary admission procedure under Part 1 of the Taxation (Cross-border Trade) Act 2018, where full relief from a liability to import duty is to be given under regulation 40 of the Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018;

(ii) the customs procedure for temporary importation with total relief from import duties provided for in Articles 250, 251 and 253 of Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code as it has effect in Northern Ireland as a result of section 7A of the [F9 European Union (Withdrawal) Act 2018].]]

[F10 (3A) An article 5 transaction does not fall within paragraph (iv) of paragraph (3)(a) above unless the taxable person has a relevant predecessor in title.]

(4) A taxable person—

(a) may not opt under paragraph (1) above where—

(i) the supply is a letting on hire;

(ii) an invoice or similar document showing an amount as being VAT or as being attributable to VAT is issued in respect of the supply;

(iii) the supply is of an air gun unless the taxable person is registered for the purposes of the Firearms Act 1968(2); F11 ...

(iv) the supply is of goods which are being disposed of in the circumstances mentioned in article 4(1)(a)(b)(c) or (d) above but which is not disregarded by virtue of that article;

[F12 (v) the supply is a supply of goods that are treated as supplied in the United Kingdom as a result of section 7(5B) of the Act; or

(vi) the supply is a supply of goods that is treated as made by the operator of an online marketplace under section 5A of the Act by virtue of the condition in subsection (1)(c)(ii) being satisfied;]

(b) may only exercise the option under paragraph (1) above in relation to supplies of—

(i) works of art of which he took possession in the circumstances mentioned in paragraph [F13 (3)(a)(v)] above, or

(ii) works of art, antiques or collectors' items of which he took possession in circumstances set out in paragraph (3)(b) above,

if at the same time he exercises the option in relation to the other.

(5) Subject to paragraph (6) below, for the purposes of determining the profit margin—

(a) the price at which goods were obtained shall be calculated as follows—

(i) (where the taxable person took possession of the goods pursuant to a supply) in the same way as the consideration for the supply would be calculated for the purposes of the Act;

(ii) (where the taxable person is a sole proprietor and the goods were supplied to him in his private capacity) in the same way as the consideration for the supply to him as a private individual would be calculated for the purposes of the Act;

(iii) (where the goods are a work of art which was acquired from [F3 a member State] by the taxable person pursuant to a supply to him by the creator of the item or his successor in title) in the same way as the value of the acquisition would be calculated for the purposes of the Act plus the VAT chargeable on the acquisition;

(iv) (where the goods are a work of art, an antique or a collectors' item which the taxable person has imported himself [F14 , which includes – if the taxable person is an auctioneer – the auctioneer having placed them in [F15 a temporary admission procedure mentioned in article 12(3)(b)(i) or the customs procedure for temporary importation mentioned in article 12(3)(b)(ii) as the case may be]]) in the same way as the value of the goods for the purpose of charging VAT on their importation would be calculated for the purposes of the Act plus any VAT chargeable on their importation;

[F16 (v) (where the taxable person took possession of the goods pursuant to a de-supplied transaction, other than an article 5 transaction) by taking the price he paid pursuant to the transaction;

(vi) (where the taxable person took possession of the goods pursuant to an article 5 transaction) by taking the price at which his relevant predecessor in title obtained the goods;]

(b) the price at which goods are sold shall be calculated in the same way as the consideration for the supply would be calculated for the purposes of the Act.

F17 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Subject to paragraph (7) below, where the taxable person is an agent acting in his own name the price at which the goods were obtained shall be calculated in accordance with paragraph (5)(a) above, but the selling price calculated in accordance with paragraph (5)(b) above shall be increased by the amount of any consideration payable to the taxable person in respect of services supplied by him to the purchaser in connection with the supply of the goods.

(7) Instead of calculating the price at which goods were obtained or supplied in accordance with paragraph (6) above an auctioneer acting in his own name may—

[F18 (a) calculate the price at which they were obtained by deducting from the successful bid the amount of the commission payable to him under his contract with the vendor for the sale of the goods;]

(b) calculate the price at which they were supplied by adding to the successful bid the consideration for any supply of services by him to the purchaser in connection with the sale of the goods,

in either (or both) cases excluding the consideration for supplies of services that are not chargeable to VAT.

(8) Where a taxable person opts under paragraph (1) above in respect of goods of which he took possession in the circumstances set out in paragraph [F19 (3)(a)(v)] and (b) above, the exercise of the option shall—

(a) be notified by him to the Commissioners in writing;

(b) have effect from the date of that notification or such later date as may be specified therein;

(c) subject to paragraph (9) below, apply to all supplies of such goods made by the taxable person in the period ending 2 years after the date on which it first had effect or the date on which written notification of its revocation is given to the Commissioners, whichever is the later.

(9) Notwithstanding paragraph (8)(c) above a taxable person may elect to account for VAT chargeable on any particular supply of such goods by reference to the value of that supply.

[F20 (10) For the purposes of this article—

“article 5 transaction” means a transaction which is a de-supplied transaction by virtue of a provision of article 5 above or a corresponding provision made under the Manx Act;

“de-supplied transaction” means a transaction which was treated by virtue of any Order made or having effect as if made under section 5(3) of the Act or under the corresponding provisions of the Manx Act as being neither a supply of goods nor a supply of services.

(11) For the purposes of this article a person is a relevant predecessor in title of a taxable person if—

(a) he is the person from whom the taxable person took possession of the goods and himself took possession of them in any of the circumstances described in paragraph (3) above, but not pursuant to an article 5 transaction; or

(b) where the goods have been the subject of a succession of two or more article 5 transactions (culminating in the article 5 transaction to which the taxable person was a party), he was a party to one of those transactions and himself took possession of the goods in any of the circumstances described in paragraph (3) above, but not pursuant to an article 5 transaction.]

Textual Amendments

F1 Art. 12(3)(a) substituted (3.7.1997) by The Value Added Tax (Special Provisions) (Amendment) Order 1997 (S.I. 1997/1616), arts. 1, 3

F2 Words in art. 12(3)(a) inserted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 30(5)(a) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F3 Words in art. 12 substituted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 30(2) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F4 Words in art. 12(3)(a)(ii) inserted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 30(5)(b) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F5 Art. 12(3)(a)(iii)(iv) substituted (1.7.2002) by The Value Added Tax (Special Provisions) (Amendment) (No. 2) Order 2002 (S.I. 2002/1503), arts. 1(1), 2(a) (with art. 1(2))

F6 Art. 12(3)(aa) inserted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 30(5)(c) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F7 Words in art. 12(3)(b) inserted (1.9.2006) by The Value Added Tax (Treatment of Transactions and Special Provisions) (Amendment) Order 2006 (S.I. 2006/2187), arts. 1, 3(2)

F8 Art. 12(3)(b)(i)(ii) substituted for words (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 30(5)(d) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F9 Words in art. 12(3)(b)(ii) substituted (1.12.2021) by The Value Added Tax (Distance Selling and Miscellaneous Amendments) Regulations 2021 (S.I. 2021/1164), regs. 1, 34

F10 Art. 12(3A) inserted (1.7.2002) by The Value Added Tax (Special Provisions) (Amendment) (No. 2) Order 2002 (S.I. 2002/1503), arts. 1(1), 2(b) (with art. 1(2))

F11 Word in art. 12(4)(a)(iii) omitted (1.8.2021) by virtue of The Value Added Tax (Amendment) (EU Exit) Regulations 2021 (S.I. 2021/715), regs. 1, 13(a)

F12 Art. 12(4)(a)(v)(vi) inserted (1.8.2021) by The Value Added Tax (Amendment) (EU Exit) Regulations 2021 (S.I. 2021/715), regs. 1, 13(b)

F13 Word in art. 12(4)(b)(i) substituted (18.3.1998) by The Value Added Tax (Special Provisions) (Amendment) Order 1998 (S.I. 1998/760), arts. 1, 5

F14 Words in art. 12(5)(a)(iv) inserted (1.9.2006) by The Value Added Tax (Treatment of Transactions and Special Provisions) (Amendment) Order 2006 (S.I. 2006/2187), arts. 1, 3(3)

F15 Words in art. 12(5)(iv) substituted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 30(5)(e) (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F16 Art. 12(5)(a)(v)(vi) substituted for art. 12(5)(a)(v) (1.7.2002) by The Value Added Tax (Special Provisions) (Amendment) (No. 2) Order 2002 (S.I. 2002/1503), arts. 1(1), 2(c) (with art. 1(2))

F17 Art. 12(5)(c) omitted (1.7.2002) by virtue of The Value Added Tax (Special Provisions) (Amendment) (No. 2) Order 2002 (S.I. 2002/1503), arts. 1(1), 2(d) (with art. 1(2))

F18 Art. 12(7)(a) substituted (2.1.2002) by The Value Added Tax (Special Provisions) (Amendment) Order 2001 (S.I. 2001/3753), arts. 1, 3

F19 Word in art. 12(8) substituted (18.3.1998) by virtue of The Value Added Tax (Special Provisions) (Amendment) Order 1998 (S.I. 1998/760), arts. 1, 5

F20 Art. 12(10)(11) added (1.7.2002) by The Value Added Tax (Special Provisions) (Amendment) (No. 2) Order 2002 (S.I. 2002/1503), arts. 1(1), 2(e) (with art. 1(2))

Commencement Information

I1 Art. 12 in force at 1.6.1995, see art. 1

(1)

Profit margin is defined for these purposes in section 50A (4) of the Value Added Tax Act 1994 (c. 23) which was inserted by section 24(1) of the Finance Act 1995 (c. 4).

(2)

1968 c. 27; section 5(1) was amended by section 1 of the Firearms (Amendment) Act 1988 (c. 45).