The Value Added Tax (Miscellaneous and Transitional Provisions, Amendment and Revocation) (EU Exit) Regulations 2020

Explanatory Note

(This note is not part of the Regulations)

These Regulations make appropriate provision relating to value added tax in consequence of, or otherwise in connection with, the withdrawal of the United Kingdom from the EU, including such provision as might be made by Act of Parliament. They include appropriate saving and transitional provision in consequence of, and in connection with the coming into force of, the Taxation (Cross-border Trade) Act 2018 (c. 22) (“TCTA 2018”).

M1 M2 These Regulations include amendments to EU Exit legislation required in consequence of the United Kingdom having agreed a Withdrawal Agreement with the EU on 19th October 2019 (“the Withdrawal Agreement”) and having entered a transition period from Exit day until IP completion day. Articles 51, 53 and 99 of the Withdrawal Agreement are relevant to value added tax. The rights, powers, liabilities, obligations, restrictions, remedies and procedures created by or arising under the Withdrawal Agreement are given legal effect by section 7A of the European Union (Withdrawal) Act 2018 (c. 16) .

Part 1 (regulations 1 to 2) deals with citation and commencement of these Regulations, which are to be brought into force by Appointed Day regulations made by the Treasury under section 52 TCTA 2018.

Part 2 (regulations 3 to 10) makes appropriate transitional provision in relation to the phasing in of border controls, to indicate how import VAT is to be accounted for by VAT registered persons making transitional simplified customs declarations using the EIDR procedure. Regulation 10 permits the Commissioners to make further provision by public notice where a person purports to make a transitional simplified customs declaration using the EIDR procedure in circumstances where either the person or the goods are ineligible to do so, or the declaration is incomplete. Any public notice made under this provision will be published at https://www.gov.uk/government/collections/customs-vat-and-excise-uk-transition-legislation-from-1-january-2021. Free of charge hard copies will be available on request from the HMRC helpline on 0300 200 3700 ([phone] for outside the UK enquiries) or by writing to HM Revenue and Customs – VAT Written Enquiries Team, 123 St Vincent Street, Glasgow City, Glasgow, G2 5EA, United Kingdom.

Part 3 (regulations 11 to 12) makes saving and transitional provision in relation to repayments to Community traders, including partial exemption adjustments where there has been a provisional attribution of input tax, for the period from 1 January 2020 to IP completion day. Regulation 11(7) permits the Commissioners to prescribe by public notice the form or manner for repaying amounts where regulation 11(1)(c) applies. Any public notice made under this provision will be published at https://www.gov.uk/government/collections/customs-vat-and-excise-uk-transition-legislation-from-1-january-2021. Free of charge hard copies will be available on request from the HMRC helpline on 0300 200 3700 ([phone] for outside the UK enquiries) or by writing to HM Revenue and Customs – VAT Written Enquiries Team, 123 St Vincent Street, Glasgow City, Glasgow, G2 5EA, United Kingdom.

The provision made by Part 3 is appropriate in consequence of, and in connection with, the withdrawal of the United Kingdom from the EU and in connection with the coming into force of regulation 71 of the Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), which omits Part 20 (repayments to Community traders) (regulations 173 to 184) from the Value Added Tax Regulations 1995 (S.I. 1995/2518).

Part 4 (regulations 13 to 18) makes appropriate saving provision in relation to special VAT accounting schemes established under EU law for supplies of digital services. These schemes are commonly referred to as the Mini One Stop Shop (MOSS) and they permit suppliers of such services to account for VAT in any of the member States of the EU (and in the United Kingdom) rather than being required to register and account for such supplies in every country in which they are made. For the United Kingdom, these schemes will be closed when the transition period provided for in the Withdrawal Agreement comes to an end. Although the special schemes will be closed, provision is made to continue their effect in modified form but only in relation to supplies that have taken place before IP completion day.

Regulations 14 to 16 make appropriate saving provision for supplies of digital services made before IP completion day in connection with the coming into force of provisions of TCTA 2018, which omit Schedules 3B (electronic, telecommunication and broadcasting services: non-Union scheme) and 3BA (electronic, telecommunication and broadcasting services: Union scheme), as well as references to these Schedules, from the Value Added Tax Act 1994 (c. 23).

Regulations 17 and 18 make appropriate saving provision in connection with the coming into force of regulations 79 and 80 of the Value Added Tax (Miscellaneous Amendments and Revocations) (EU Exit) Regulations 2019 (S.I. 2019/59), which respectively omit Part 26 (UK Union and non-Union special accounting schemes: registration, notification of changes, and returns) and Part 27 (Non-UK Union and non-Union special accounting schemes: adjustments, claims and error correction) from the Value Added Tax Regulations 1995 (S.I. 1995/2518).

Each of the saving provisions in Part 4 provides that the saving has effect subject to such modifications as may be specified in a notice published by the Commissioners. The notice is available at https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#sec15. Free of charge hard copies will be available on request from the HMRC helpline on 0300 200 3700 ([phone] for outside the UK enquiries) or by writing to HM Revenue and Customs – VAT Written Enquiries Team, 123 St Vincent Street, Glasgow City, Glasgow, G2 5EA, United Kingdom.

Article 51(4) of the Withdrawal Agreement contains specific provision in relation to special accounting scheme amendments, which must be submitted at the latest on 31st December 2021.

Part 5 (regulations 19 to 23) makes amendments to EU Exit Regulations S.I. 2019/59, S.I. 2019/60, S.I. 2019/105, S.I. 2019/513 and S.I. 2019/1214 (“the EU Exit Regulations”). References to ‘exit day’ are amended to ‘IP completion day’ and other changes are made in consequence of new legislation coming into force and to reflect updated references since the EU Exit Regulations were made, as well as in consequence of the United Kingdom entering a transition period from Exit day until IP completion day, and in consequence of the United Kingdom entering into the Withdrawal Agreement with the EU.

Part 6 (regulations 24 to 25) revokes two EU Council Decisions incorporated into domestic law as a result of section 3 of the European Union (Withdrawal) Act 2018 (c. 16). These Decisions gave authority for the United Kingdom to derogate from certain provisions in Council Directive 2006/112/EC concerning value added tax (the principal VAT Directive). Such authority is no longer required at the end of the transition period. The domestic primary and secondary legislation which gives effect to the derogations is unaffected.

Part 7 (regulation 26) revokes the Value Added Tax (Postal Packets and Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1376), which are only partially in force, and the Data-gathering Powers (Relevant Data) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/1221), which are not in force.

A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.