Finance Act 1989

CHAPTER II U.K. Value Added Tax

Zero-rating etc. U.K.

18 Buildings and land. U.K.

Schedule 3 to this Act (which makes provision about value added tax onsupplies relating to buildings and land) shall have effect.

19 Sewerage services and water. U.K.

(1) Group 2 (sewerage services and water) of Schedule 5 (zero-rating) to the M1 Value Added Tax Act 1983 shall be amended as follows.

(2) In item 1, there shall be substituted for paragraph (b)—

“(b) emptying of any cesspools, septic tanks or similar receptacles which areused otherwise than in connection with the carrying on in the course of abusiness of a relevant industrial activity.”

(3) In item 2, there shall be inserted at the beginning the words “Thesupply, for use otherwise than in connection with the carrying on in thecourse of a business of a relevant industrial activity, of”.

(4) The following shall be inserted at the end—

“Note: “Relevant industrial activity” means any activity describedin any of Divisions 1 to 5 of the 1980 edition of the publication prepared bythe Central Statistical Office and known as the Standard IndustrialClassification.”

(5) This section shall have effect in relation to supplies made on or after1st July 1990.

Marginal Citations

M1 1983 c. 55.

20 News services. U.K.

(1) In Schedule 5 to the Value Added Tax Act 1983 Group 6 (news services)shall be omitted.

(2) This section shall have effect in relation to supplies made on or after1st April 1989.

21 Fuel and power. U.K.

(1) For Group 7 (fuel and power) of Schedule 5 to the Value Added Tax Act 1983there shall be substituted—

“Group 7–Fuel and Power for Domestic or Charity Use

Item No.

1 Supplies for qualifying use of—

(a) coal, coke or other solid substances held out for sale solely as fuel;

(b) coal gas, water gas, producer gases or similar gases;

(c) petroleum gases, or other gaseous hydrocarbons, whether in a gaseous orliquid state;

(d) fuel oil, gas oil or kerosene; or

(e) electricity, heat or air-conditioning.

Notes:

(1) “Qualifying use” means—

(a) domestic use; or

(b) use by a charity otherwise than in the course or furtherance of abusiness.

(2) The following supplies are always for domestic use—

(a) a supply of not more than one tonne of coal or coke held out for sale asdomestic fuel;

(b) a supply of wood, peat or charcoal not intended for sale by the recipient;

(c) a supply to a person at any premises of piped gas (that is, gas withinparagraph (b) of item 1, or petroleum gas in a gaseous state, provided throughpipes) where the gas (together with any other piped gas provided to him at thepremises by the same supplier) was not provided at a rate exceeding 150 thermsa month;

(d) a supply of petroleum gas in a liquid state where the gas is supplied incylinders the net weight of each of which is less than 50 kilogrammes andeither the number of cylinders supplied is 20 or fewer or the gas is notintended for sale by the recipient;

(e) a supply of petroleum gas in a liquid state, otherwise than in cylinders,to a person at any premises at which he is not able to store more than twotonnes of such gas;

(f) a supply of not more than 2,300 litres of fuel oil, gas oil or kerosene;

(g) a supply of electricity to a person at any premises where the electricity(together with any other electricity provided to him at the premises by thesame supplier) was not provided at a rate exceeding 1000 kilowatt hours amonth.

(3) Supplies not within Note (2) are for domestic use if and only if the goodssupplied are for use in—

(a) a building, or part of a building, which consists of a dwelling or numberof dwellings;

(b) a building, or part of a building, used for a relevant residentialpurpose;

(c) self-catering holiday accommodation;

(d) a caravan; or

(e) a houseboat.

(4) Use for a relevant residential purpose means use as—

(a) a home or other institution providing residential accommodation forchildren;

(b) a home or other institution providing residential accommodation withpersonal care for persons in need of personal care by reason of old age,disablement, past or present dependence on alcohol or drugs or past or presentmental disorder;

(c) a hospice;

(d) residential accommodation for students or school pupils;

(e) residential accommodation for members of any of the armed forces;

(f) a monastery, nunnery or similar establishment; or

(g) an institution which is the sole or main residence of at least 90 percent. of its residents,

except use as a hospital, a prison or similar institution or an hotel orinn or similar establishment.

(5) Self-catering holiday accommodation includes any accommodation advertisedor held out as such.

(6) “Houseboat” means a boat or other floating decked structuredesigned or adapted for use solely as a place of permanent habitation and nothaving means of, or capable of being readily adapted for, self-propulsion.

(7) Where there is a supply of goods partly for qualifying use and partlynot—

(a) if at least 60 per cent. of the goods are supplied for qualifying use, thewhole supply shall be treated as a supply for qualifying use; and

(b) in any other case, an apportionment shall be made to determine the extentto which the supply is a supply for qualifying use.

(8) Paragraph (a) of item 1 shall be deemed to include combustible materialsput up for sale for kindling fires but shall not include matches upon whicha duty of customs or excise has been or is to be charged.

(9) Paragraphs (b) and (c) of item 1 do not include any road fuel gas (withinthe meaning of the Hydrocarbon Oil Duties Act 1979) onwhich a duty of excise has been charged or is chargeable.

(10) Paragraph (d) of item 1 does not include hydrocarbon oil on which a dutyof excise has been or is to be charged without relief from, or rebate of, suchduty by virtue of the provisions of the Hydrocarbon Oil Duties Act 1979.

(11) “Fuel oil” means heavy oil which contains in solution anamount of asphaltenes of not less than 0.5 per cent. or which contains lessthan 0.5 per cent. but not less than 0.1 per cent. of asphaltenes and has aclosed flash point not exceeding 150°C.

(12) “Gas oil” means heavy oil of which not more than 50 per cent.by volume distils at a temperature not exceeding 240°C and of which morethan 50 per cent. by volume distils at a temperature not exceeding 340°C.

(13) “Kerosene” means heavy oil of which more than 50 per cent.by volume distils at a temperature not exceeding 240°C.

(14) “Heavy oil” shall have the same meaning as in the HydrocarbonOil Duties Act 1979.”

(2) This section shall have effect in relation to supplies made on or afterlst July 1990.

22 Protective boots and helmets. U.K.

(1) In item 2 of Group 17 (protective boots and helmets) of Schedule 5 to the M2 Value Added Tax Act 1983 there shall be inserted at thebeginning the words “The supply to a person for use otherwise than byemployees of his of”.

(2) In Note (5) to that Group (supply of certain goods to include supply ofcertain services in respect of such goods) there shall be inserted at the endthe words “, but, in the case of goods comprised in item 2, only if thegoods are for use otherwise than by employees of the person to whom theservices are supplied.”

(3) This section shall have effect in relation to supplies made on or after1st April 1989.

Marginal Citations

M2 1983 c. 55.

23 Incorrect certificates. U.K.

(1) The following section shall be inserted in the M3 Finance Act 1985 after section 13—

“13A Incorrect certificates as to zero-rating etc.

(1) Subject to subsections (3) and (4) below, where—

(a) a person to whom one or more supplies are, or are to be, made gives to thesupplier—

(i) a certificate that the supply or supplies fall, or will fall, wholly orpartly within Group 7, 8 or 8A of Schedule 5, or Group 1 of Schedule 6, to theprincipal Act; or

(ii) a certificate such as is mentioned in paragraph 13(4)(f) of Schedule 3 tothe Finance Act 1989 relating to the supply or supplies; and

(b) the certificate is incorrect,

the person giving the certificate shall be liable to a penalty.

(2) The amount of the penalty shall be equal to the difference between theamount of the tax which would have been chargeable on the supply or suppliesif the certificate had been correct and the amount of tax actually sochargeable.

(3) The giving of a certificate shall not give rise to a penalty under thissection if the person who gave it satisfies the Commissioners or, on appeal,a value added tax tribunal that there is a reasonable excuse for his havinggiven it.

(4) Where by reason of giving a certificate a person is convicted of anoffence (whether under the principal Act or otherwise), the giving of thecertificate shall not also give rise to a penalty under this section.”

(2) This section shall have effect in relation to certificates given on orafter the day on which this Act is passed.

Marginal Citations

M3 1985 c. 54.

Other provisions U.K.

24 Recovery of overpaid VAT. U.K.

(1) Where a person has paid an amount to the Commissioners by way of valueadded tax which was not tax due to them, they shall be liable to repay theamount to him.

(2) The Commissioners shall only be liable to repay an amount under thissection on a claim being made for the purpose.

(3) It shall be a defence, in relation to a claim under this section, thatrepayment of an amount would unjustly enrich the claimant.

(4) No amount may be claimed under this section after the expiry of 6 yearsfrom the date on which it was paid, except where subsection (5) below applies.

(5) Where an amount has been paid to the Commissioners by reason of a mistake,a claim for the repayment of the amount under this section may be made at anytime before the expiry of 6 years from the date on which the claimantdiscovered the mistake or could with reasonable diligence have discovered it.

(6) A claim under this section shall be made in such form and manner and shallbe supported by such documentary evidence as the Commissioners prescribe byregulations; and regulations under this subsection may make differentprovision for different cases.

(7) Except as provided by this section, the Commissioners shall not be liableto repay an amount paid to them by way of value added tax by virtue of thefact that it was not tax due to them.

(8) The preceding provisions of this section apply to an amount paid before,as well as to an amount paid after, the day on which this section comes intoforce, except where the Commissioners have received a claim for repayment ofthe amount before that day.

(9) The following paragraph shall be inserted at the end of section 40(1) ofthe M4 Value Added Tax Act 1983 (appeals)—

“(s) a claim for the repayment of an amount under section 24 of the Finance Act1989 (recovery of overpaid tax).”

(10) This section shall come into force on such day as the Treasury may byorder made by statutory instrument appoint.

(11) Section 45 of the Value Added Tax Act 1983 (orders) shall not apply tosubsection (10) above.

Modifications etc. (not altering text)

C1 Power of appointment conferred by s. 24(10) fully exercised(1.1.1990): S.I. 1989/2271, art. 2

Marginal Citations

M4 1983 c. 55.

25 Administration etc. U.K.

(1) Schedule 7 to the Value Added Tax Act 1983 (administration, collection andenforcement) shall be amended as follows.

(2) In paragraph 2 (accounting for and payment of tax) for paragraphs (b) and(c) of sub-paragraph (4) there shall be substituted—

“(b) with respect to the making of entries in accounts for the purpose ofmaking adjustments, whether for the correction of errors or otherwise; and

(c) for the making of financial adjustments in connection with the making ofentries in accounts for the purpose mentioned in paragraph (b) above.”

(3) In paragraph 7(1) (power to require the keeping of records) after the word “may” there shall be inserted the words “by regulations”.

(4) After paragraph 7(1) there shall be inserted—

“(1A) Regulations under sub-paragraph (1) above may make different provision fordifferent cases and may be framed by reference to such records as may bespecified in any notice published by the Commissioners in pursuance of theregulations and not withdrawn by a further notice.”

(5) This section shall come into force on such day as the Treasury may byorder made by statutory instrument appoint.

(6) Section 45 of the Value Added Tax Act 1983 (orders) shall not apply tosubsection (5) above.

Modifications etc. (not altering text)

C2 Power of appointment conferred by s. 25(5) fully exercised(4.12.1989): S.I. 1989/2271, art. 3

26 Input tax on self-supplies. U.K.

At the end of subsection (3) of section 15 of the M5 Value Added Tax Act 1983 (input tax allowable under section 14) thereshall be added—

“(d) preventing input tax on a supply which, under or by virtue of anyprovision of this Act, a person makes to himself from being allowable asattributable to that supply.”

Marginal Citations

M5 1983 c.55.