Citation and commencementI11

This Order may be cited as the Value Added Tax (Cars) Order 1992 and shall come into force on 1st January 1993.

Annotations:
Commencement Information
I1

Art. 1 in force at 1.1.1993, see art. 1

InterpretationI22

In this Order–

  • “the Act” means the Value Added Tax Act F11994;

  • F2“the Manx Act” means the Value Added Tax and Other Taxes Act 1973

  • “car dealer” means a taxable person who carries on a business which consists of or includes the sale of motor cars;

  • “finance agreement” means an agreement for the sale of goods whereby the property in those goods is not to be transferred until the whole of the price has been paid and the seller retains the right to repossess the goods;

  • “insurer” means a person permitted, in accordance with section 2 of the Insurance Companies Act 19822 to effect and carry out contracts of insurance against risks of loss of or damage to goods;

  • “motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either–

    1. a

      is constructed or adapted solely or mainly for the carriage of passengers; or

    2. b

      has to the rear of driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

    but does not include–

    1. i

      vehicles capable of accommodating only one person or suitable for carrying twelve or more persons;

    2. ii

      vehicles of not less than three tonnes unladen weight;

    3. iii

      caravans, ambulances and prison vans;

    4. iv

      vehicles of a type approved by the Assistant Commissioner of Police of the Metropolis conforming to the conditions of fitness for the time being laid down by him for the purposes of the London Cab Order 19343; or

    5. v

      vehicles constructed for a special purpose other than the carriage of persons and having no other accommodation for carrying persons than such as is incidental to that purpose.

  • F3“auctioneer” means a person who sells or offers for sale goods at any public sale where persons become purchasers by competition, being the highest bidders.

RevocationsI33

The provisions specified in the first column of the Schedule to this Order are hereby revoked to the extent specified in the second column of that Schedule.

Annotations:
Commencement Information
I3

Art. 3 in force at 1.1.1993, see art. 1

Treatment of transactionsI44

1

F11Subject to paragraphs (1A) to (2) below, each of the following descriptions of transactions shall be treated as neither a supply of goods nor a supply of services–

a

the disposal of a used motor car by a person who repossessed it under the terms of a finance agreement, where the motor car is in the same condition as it was in when it was repossessed;

b

the disposal of a used motor car by an insurer who has taken it in the settlement of a claim under a policy of insurance, where the motor car is disposed of in the same condition as it was in when it was so taken;

c

the disposal of a motor car for no consideration F13....

F4d

services in connection with a supply of a used motor car provided by an agent acting in his own name to the purchaser of the motor car the consideration for which is taken into account by virtue of article 8(8) below in calculating the price at which the agent sold the motor car;

e

services in connection with the sale of a used motor car provided by an auctioneer acting in his own name to the vendor or the purchaser of the motor car the consideration for which is taken into account by virtue of article 8(9) below in calculating the price at which the auctioneer obtained (or as the case may be) sold the motor car;

F12f

a relevant supply of services by a taxable person to whom a motor car has been let on hire or supplied or by whom a motor car has been acquired from another member State or imported.

F101A

Paragraph (1) above shall not apply in relation to a case falling within paragraph (1)(a) to (c) above unless the tax on any previous supply, acquisition or importation was wholly excluded from credit under section 25 of the Act.

1B

Paragraph (1) above shall not apply in relation to a case falling within paragraph (1)(f) above unless the tax on any previous letting on hire, supply, acquisition or importation was wholly or partly excluded from credit under section 25 of the Act.

1C

For the purposes of paragraph (1)(f) above a relevant supply of services is—

a

the letting on hire of a motor car to any person for no consideration or for a consideration which is less than that which would be payable in money if it were a commercial transaction conducted at arms length; or

b

the making available of a motor car (otherwise than by letting it on hire) to any person (including, where the taxable person is an individual, himself, and where the taxable person is a partnership, a partner) for private use, whether or not for a consideration.

2

Nothing in paragraph (1)(a) or (b) above shall be construed as meaning that a transaction is not a supply for the purposes of section F511(1)(a) of the Act4.

F84A

Paragraph 5(4) of Schedule 4 to the Act shall not apply in relation to a motor car to which either article 5 or article 6 below applies which is used or made available in circumstances where, but for the operation of that paragraph, it would be treated by virtue of one or other of those articles as supplied to and by a taxable person.

Self-supplies

I5F145

1

This article applies to any motor car—

a

which has been produced by a taxable person otherwise than by the conversion of a vehicle obtained by him;

b

which has been produced by the taxable person by the conversion of another vehicle (whether a motor car or not) and in relation to which the condition in paragraph (2) below is satisfied; or

c

which was supplied to, or acquired from another member State or imported by, a taxable person and in relation to which the condition in paragraph (2) below is satisfied,

but does not apply to any motor car to which article 6 below applies.

2

The condition referred to in paragraph (1)(b) and (c) above is that the tax on the supply to, or acquisition or importation by, the taxable person of the motor car or the vehicle from which it was converted, as the case may be, was not wholly excluded from credit under section 25 of the Act.

3

Where a motor car to which this article applies—

a

has not been supplied by the taxable person in the course or furtherance of a business carried on by him; and

b

is used by him such that it is not used exclusively for the purposes of a business carried on by him,

it shall be treated for the purposes of the Act as both supplied to him for the purposes of a business carried on by him and supplied by him for the purposes of that business.

I66

F151

This article applies to any motor car which has been supplied to, or acquired from another member State or imported by, a taxable person primarily for the purpose of—

a

being provided by him for hire with the services of a driver for the purpose of carrying passengers;

b

being provided by him for self-drive hire; or

c

being used as a vehicle in which instruction in the driving of a motor car is to be given by him.

1A

Where a motor car to which this article applies—

a

is neither supplied nor converted into another vehicle (whether a motor car or not) by the taxable person, in either case, in the course or furtherance of any business carried on by him; and

b

is used by him primarily for a purpose other than one of the purposes described in paragraph (1) above, but is not used exclusively for the purposes of a business carried on by him,

it shall be treated for the purposes of the Act as both supplied to him for the purposes of that business and supplied by him in the course or furtherance of that business.

2

In this article “self-drive hire” means hire where the hirer is the person normally expected to drive the motor car and the period of hire to each hirer, together with the period of hire of any other motor car expected to be hired to him by the taxable person–

a

will normally be less than 30 consecutive days; and

b

will normally be less than 90 days in any period of 12 months.

F96A

For the purposes of articles 5 and 6 above article 7 of the Value Added Tax (Input Tax) Order 1992 shall apply for the purpose of determining whether a motor car is used exclusively for the purposes of the taxable person’s business as it would apply for the purpose of determining whether he so intended to use it.

I77

Articles 5 and 6 above shall apply in relation to any bodies corporate which are treated for the purposes of section F743 of the Act as members of a group as if those bodies were one person, but any motor car which would fall to be treated as supplied to and by that person shall be treated as supplied to and by the representative member.

Relief for second-hand motor carsI8F68

1

Subject to complying with such conditions (including the keeping of such records and accounts) 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 (3) below, where a person supplies a used motor car which he took possession of in any of the circumstances set out in paragraph (2) below, he may opt to account for the VAT chargeable on the supply on the profit margin on the supply instead of by reference to its value.

2

The circumstances referred to in paragraph (1) above are that the taxable person took possession of the motor car pursuant to—

a

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

b

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 another member State;

F16bb

a supply to which the provisions of article 7(4) of the Value Added Tax (Input Tax) Order 1992 applied;

c

a transaction which was treated by virtue of any Order 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.

3

This article does not apply to—

a

a supply which is a letting on hire;

b

the supply by any person of a motor car which was produced by him, if it was neither previously supplied by him in the course or furtherance of any business carried on by him nor treated as so supplied by virtue of article 5 above;

c

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

F17d

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F184

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

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

a

the price at which the motor car was obtained shall be calculated as follows—

i

(where the taxable person took possession of the used motor car 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 used motor car was 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;

b

the price at which the motor car is sold shall be calculated in the same way as the consideration for the supply would be calculated for the purposes of the Act.

6

Subject to paragraph (7) below, where the taxable person is an agent acting in his own name the price at which the motor car was 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 motor car.

7

Instead of calculating the price at which the motor car was obtained or supplied in accordance with paragraph (6) above, an auctioneer acting in his own name may—

a

calculate the price at which the motor car was obtained by deducting from the successful bid the consideration for any services supplied by him to the vendor in connection with the sale of the motor car;

b

calculate the price at which the motor car was 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 motor car,

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

Irvine PatnickTim BoswellTwo of the Lords Commissioners of Her Majesty’s Treasury