The Value Added Tax (Special Provisions) (Amendment) (No. 2) Order 2002

2.  Article 12 of the Value Added Tax (Special Provisions) Order 1995 is amended as follows—

(a) for paragraphs (iii) and (iv) of paragraph (3)(a), substitute—

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

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

(b) after paragraph (3), insert—

“(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.”;

(c) for paragraph (v) of paragraph (5)(a), substitute—

“(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;”;

(d) omit sub-paragraph (c) of paragraph (5); and

(e) after paragraph (9) add—

“(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(1);

“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.”.

(1)

Article 2 of the Value Added Tax (Special Provisions) Order 1995 was amended by S.I. 1998/760 so as to define the Manx Act as “the Value Added Tax Act 1996” (Act of Tynwald 1996; c.1).