The Value Added Tax (Input Tax) Order 1992

7.—(1) Subject to paragraph (2) [F1 to (2H)] below tax charged on—

(a) the supply [F2 (including a letting on hire)] to a taxable person;

F3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or

(c) the importation by a taxable person,

of a motor car shall be excluded from any credit under section [F4 25] of the Act.

[F5 (2) Paragraph (1) above does not apply where—

(a) the motor car is—

(i) a qualifying motor car;

(ii) [F6 supplied (including on a letting on hire) to], F7 ... or imported by, a taxable person; and

(iii) the relevant condition is satisfied;

[F8 (aa) the motor car forms part of the stock in trade of a motor manufacturer or a motor dealer;]

(b) the supply is a letting on hire of a motor car which is not a qualifying motor car [F9 (other than a supply on a letting on hire of a motor car which is not a qualifying motor car by virtue only of the application of paragraph (2C) below, to a person whose supply on a letting on hire prior to 1st August 1995 resulted in the application of that paragraph)];

(c) the motor car is unused and is supplied to a taxable person whose only taxable supplies are concerned with the letting of motor cars on hire to another taxable person whose business consists predominantly of making supplies of a description falling within item 14 of Group 12 of Schedule 8 to the Act; or

(d) the motor car is unused and is supplied on a letting on hire to a taxable person whose business consists predominantly of making supplies of a description falling within item 14 of Group 12 of Schedule 8 to the Act, by a taxable person whose only taxable supplies are concerned with the letting on hire of motor cars to such a taxable person.]

[F10 (2A) Subject to paragraph (2B) and (2C) below, for the purposes of paragraph (2)(a) [F11 and (b)] above a motor car is a qualifying motor car if—

(a) it has never been supplied F12 ... or imported in circumstances in which the VAT on that supply F13 ... or importation was wholly excluded from credit as input tax by virtue of paragraph (1) above; or

(b) a taxable person has elected for it to be treated as such.

(2B) A taxable person may only elect for a motor car to be treated as a qualifying motor car if it—

(a) is first registered on or after 1st August 1995;

(b) was supplied to, F14 ... or imported by, him prior to that date in circumstances in which the VAT on that supply F15 ... or importation was wholly excluded from credit as input tax by virtue of paragraph (1) above; and

(c) had not been supplied on a letting on hire by him prior to 1st August 1995.

(2C) A motor car that is supplied F16 ... or imported on or after 1st August 1995 and which would, apart from this paragraph, be a qualifying motor car by virtue of sub-paragraph (a) of paragraph (2A) above shall not be such a car if it was supplied on a letting on hire prior to that date by the person to whom it is supplied or by whom it is F17 ... imported (as the case may be).

(2D) References in this article to registration of a motor car mean registration in accordance with section 21 of the Vehicle Excise and Registration Act 1994.

(2E) For the purposes of paragraph (2)(a) above the relevant condition is that the letting on hire, supply F18 ... or importation (as the case may be) is to a taxable person who intends to use the motor car either—

(a) exclusively for the purposes of a business carried on by him, but this is subject to paragraph (2G) below; or

(b) primarily for a relevant purpose.

(2F) For the purposes of paragraph (2E) above a relevant purpose, in relation to a motor car which is let on hire or supplied to, F19 ... or imported by, a taxable person (as the case may be), is any of the following purposes—

(a) to provide it on hire with the services of a driver for the purpose of carrying passengers;

(b) to provide it for self-drive hire; or

(c) to use it as a vehicle in which instruction in the driving of a motor car is to be given by him.

(2G) A taxable person shall not be taken to intend to use a motor car exclusively for the purposes of a business carried on by him if he intends to—

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

(2H) Where paragraph (1) above applies to a supply of a motor car on a letting on hire it shall apply to the tax charged on that supply as if for the word “tax” there were substituted “one half of the tax”].

(3) In this article—

F20 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) “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—

(i) will normally be less than 30 consecutive days; and

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

F21 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F21 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in art. 7(1) inserted (1.8.1995) by The Value Added Tax (Input Tax) (Amendment) (No. 3) Order 1995 (S.I. 1995/1666), arts. 1, 4(a)

F2 Words in art. 7(1)(a) inserted (1.8.1995) by The Value Added Tax (Input Tax) (Amendment) (No. 3) Order 1995 (S.I. 1995/1666), arts. 1, 4(b)

F3 Art. 7(1)(b) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(a); S.I. 2020/1641, reg. 2, Sch.

F4 Word in art. 7(1) substituted (1.3.1995) by The Value Added Tax (Input Tax) (Amendment) Order 1995 (S.I. 1995/281), arts. 1, 7(a)

F5 Art. 7(2) substituted (1.8.1995) by The Value Added Tax (Input Tax) (Amendment) (No. 3) Order 1995 (S.I. 1995/1666), arts. 1, 5

F6 Words in art. 7(2)(a)(ii) substituted (13.11.1998 in respect of VAT charged on supplies received, or acquisitions from another member State or importations made, on or after that date) by The Value Added Tax (Input Tax) (Amendment) Order 1998 (S.I. 1998/2767), arts. 1, 2(a)

F7 Words in art. 7(2)(a)(ii) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(b); S.I. 2020/1641, reg. 2, Sch.

F8 Art. 7(2)(aa) inserted (1.12.1999) by The Value Added Tax (Input Tax) (Amendment) Order 1999 (S.I. 1999/2930), arts. 1(2), 6(a)

F9 Words in art. 7(2)(b) inserted (13.11.1998 in respect of VAT charged on supplies received, or acquisitions from another member State or importations made, on or after that date) by The Value Added Tax (Input Tax) (Amendment) Order 1998 (S.I. 1998/2767), arts. 1, 2(b)

F10 Art. 7(2A)-(2H) inserted (1.8.1995) by The Value Added Tax (Input Tax) (Amendment) (No. 3) Order 1995 (S.I. 1995/1666), arts. 1, 6

F11 Words in art. 7(2A) added (1.12.1999) by The Value Added Tax (Input Tax) (Amendment) Order 1999 (S.I. 1999/2930), arts. 1(2), 6(b)

F12 Words in art. 7(2A)(a) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(c)(i); S.I. 2020/1641, reg. 2, Sch.

F13 Word in art. 7(2A)(a) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(c)(ii); S.I. 2020/1641, reg. 2, Sch.

F14 Words in art. 7(2B)(b) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(d)(i); S.I. 2020/1641, reg. 2, Sch.

F15 Word in art. 7(2B)(b) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(d)(ii); S.I. 2020/1641, reg. 2, Sch.

F16 Words in art. 7(2C) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(e)(i); S.I. 2020/1641, reg. 2, Sch.

F17 Words in art. 7(2C) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(e)(ii); S.I. 2020/1641, reg. 2, Sch.

F18 Word in art. 7(2E) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(f); S.I. 2020/1641, reg. 2, Sch.

F19 Words in art. 7(2F) omitted (31.12.2020) by virtue of The Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), regs. 1, 8(6)(g); S.I. 2020/1641, reg. 2, Sch.

F20 Art. 7(3)(a) revoked (1.8.1995) by The Value Added Tax (Input Tax) (Amendment) (No. 3) Order 1995 (S.I. 1995/1666), arts. 1, 7

F21 Art. 7(4)(5) omitted (1.3.2000) by virtue of The Value Added Tax (Input Tax) (Amendment) Order 1999 (S.I. 1999/2930), arts. 1(3), 6(c)

Modifications etc. (not altering text)

C1 Art. 7 applied (1.8.1995) by S.I. 1992/3122, art. 6A (as inserted by The Value Added Tax (Cars) (Amendment) (No. 2) Order 1995 (S.I. 1995/1667), arts. 1, 7)

Commencement Information

I1 Art. 7 in force at 1.1.1993, see art. 1