The Value Added Tax (Amendment) Regulations 2001

Explanatory Note

(This note is not part of the Regulations)

These Regulations, which come into force on 1st April 2001, amend the Value Added Tax Regulations 1995(1) (the “principal Regulations”).

Value Added Tax (“VAT”) charged on the importation of goods from outside the member States is payable as if it were a duty of customs. Therefore relevant customs legislation applies to import VAT unless it is excepted or adapted by regulations (or there is a contrary intention)(2).

Regulation 3 removes the Community legislation associated with processing under customs control(3) from the existing lists of Community customs provisions which are excepted from applying to import VAT(4). The result of the amendment is that the import VAT on goods under processing for customs control becomes due at the same time as customs duty, thus implementing the UK’s obligations under Article 10(3) of the Sixth VAT Directive(5).

Regulation 4 ensures that goods on which import VAT has been charged before 1st April 2001 are not chargeable to VAT again on release for free circulation.

Regulation 5 adds the Community legislation that charges compensatory interest on customs debts(6) to the lists of excepted customs legislation. No compensatory interest is therefore chargeable on the import VAT element of a customs debt.

Regulation 6 amends Schedule 1 to the principal Regulations by substituting revised Forms 4 and 5, the Value Added Tax Return and Final Value Added Tax Return respectively. The revised forms omit a box which, in the former version, required those completing the forms to declare which, if any, VAT retail scheme had been used during the period covered by the return.

(1)

S.I. 1995/2518.

(2)

Sections 1(4) and 16(1) of the Value Added Tax Act 1994 (c. 23).

(3)

Articles 130 to 136 of Council Regulation (EEC) No. 2913/92 (the Community Customs Code) (OJ No. L 302, 19.10.92, p. 1) and Articles 650 to 669 of Commission Regulation (EEC) No. 2454/93 (OJ No. L 253, 11.10.93, p. 1).

(4)

S.I. 1995/2518 regulation 120.

(5)

Council Directive 77/388/EEC (OJ No. L 145, 13.6.77, p. 1) (as amended by Article 1(6) of Council Directive 91/680/EEC (OJ L 376, 31.12.91, p. 1)).

(6)

Articles 589 and 709 of Commission Regulation (EEC) No. 2454/93 (OJ No. L 253, 11.10.93, p. 1).