The UK government released a number of new amendments to the Finance Bill on 18 May. The proposals will be considered at report stage on 24 May and are expected to be passed, given the government’s majority in the House of Commons.
In summary, the amendments are as follows:
VAT and distance selling: Northern Ireland: new clauses 17 and 18 and new Sch 1 introduce new legislation to implement the VAT distance-selling regime in relation to Northern Ireland. The EU-wide ‘e-commerce package’ will come into effect across the EU from 1 July 2021, via amendments to the principal VAT Directive. The new legislation will:
make amendments to VATA 1994 Schs 9ZA and 9ZB in relation to distance selling between Northern Ireland and the EU;
introduce new Sch 9ZD on the one-stop shop and new Sch 9ZE on the import one-stop shop; and
introduce new Sch 9ZF which will provide further modifications to VATA 1994, VAT Regulations SI 1995/2518 and other relevant VAT legislation.
These amendments come on top of the significant upheaval of UK VAT law following the end of the Brexit transition period, with new and modified provisions required to reflect the application of the Ireland-Northern Ireland Protocol.
Continuing effect of principle preventing the abuse of the VAT system: New clause 19 clarifies the effect of the continuing application of the principle of EU law preventing the abuse of the VAT system as set out in Taxation (Cross-border Trade) Act 2018 s 42(4). Subsection (4) already provides that that principle ‘continues to be relevant, in accordance with [the European Union (Withdrawal) Act 2018], for the purposes of the law relating to value added tax’.
VAT on supply of imported works of Art: new Clause 20 aims to ensure that the correct amount of VAT is charged on works of art and antiques etc when they are imported in a low-value consignment.
Clause 9: Super-deductions and other temporary first-year allowances: amendment number 2 will enable background plant and machinery in leased property to qualify for a super-deduction or a special-rate allowance.
In respect of this change, Steven Bone, director for Gateley Capitus, said: ‘Landlords and other lessors will be delighted that this unfairness has been removed. It ends the uncertainty about whether assets are provided for leasing under common PropCo/OpCo structures, management agreements and licences to occupy. It also resolves the practical challenge of how to claim allowances for items in the common parts of multi-let properties.’
Sch 7: Hybrid and other mismatches: amendment number 3 makes one minor correction to a reference.
Sch 16: Increased SDLT rates for non-resident transactions: amendments 4–6 introduce changes to the de minimis rule in para 10(4) of the new Sch 9A to FA 2003, and an amendment to ensure that a corporate trustee which is UK resident for the purposes of the Corporation Tax Acts cannot be ‘non-resident’ for the purposes of the non-resident surcharge.
Sch 20: Restriction of use of rebated diesel and biofuels: amendments 7–21 set out various changes to the revised treatment of red diesel, particularly around what is included in the definition of ‘agricultural vehicles’ for the purposes of the continuing availability of red diesel.
Sch 24: Penalties for deliberately withholding information: amendment 22 will ensure that references to ‘category 1 information’, for the purposes of penalties for deliberately withholding tax information, operate as intended by reference to ‘offshore matters’.
The Treasury has published explanatory notes to these report stage amendments.
It should be noted that the numbering of new clauses and new schedules applies for the purpose of the parliamentary process only. The clauses and schedules will be slotted into the Bill at the appropriate place after the amendments have been passed, which means subsequent clauses and schedules will be renumbered.
The UK government released a number of new amendments to the Finance Bill on 18 May. The proposals will be considered at report stage on 24 May and are expected to be passed, given the government’s majority in the House of Commons.
In summary, the amendments are as follows:
VAT and distance selling: Northern Ireland: new clauses 17 and 18 and new Sch 1 introduce new legislation to implement the VAT distance-selling regime in relation to Northern Ireland. The EU-wide ‘e-commerce package’ will come into effect across the EU from 1 July 2021, via amendments to the principal VAT Directive. The new legislation will:
make amendments to VATA 1994 Schs 9ZA and 9ZB in relation to distance selling between Northern Ireland and the EU;
introduce new Sch 9ZD on the one-stop shop and new Sch 9ZE on the import one-stop shop; and
introduce new Sch 9ZF which will provide further modifications to VATA 1994, VAT Regulations SI 1995/2518 and other relevant VAT legislation.
These amendments come on top of the significant upheaval of UK VAT law following the end of the Brexit transition period, with new and modified provisions required to reflect the application of the Ireland-Northern Ireland Protocol.
Continuing effect of principle preventing the abuse of the VAT system: New clause 19 clarifies the effect of the continuing application of the principle of EU law preventing the abuse of the VAT system as set out in Taxation (Cross-border Trade) Act 2018 s 42(4). Subsection (4) already provides that that principle ‘continues to be relevant, in accordance with [the European Union (Withdrawal) Act 2018], for the purposes of the law relating to value added tax’.
VAT on supply of imported works of Art: new Clause 20 aims to ensure that the correct amount of VAT is charged on works of art and antiques etc when they are imported in a low-value consignment.
Clause 9: Super-deductions and other temporary first-year allowances: amendment number 2 will enable background plant and machinery in leased property to qualify for a super-deduction or a special-rate allowance.
In respect of this change, Steven Bone, director for Gateley Capitus, said: ‘Landlords and other lessors will be delighted that this unfairness has been removed. It ends the uncertainty about whether assets are provided for leasing under common PropCo/OpCo structures, management agreements and licences to occupy. It also resolves the practical challenge of how to claim allowances for items in the common parts of multi-let properties.’
Sch 7: Hybrid and other mismatches: amendment number 3 makes one minor correction to a reference.
Sch 16: Increased SDLT rates for non-resident transactions: amendments 4–6 introduce changes to the de minimis rule in para 10(4) of the new Sch 9A to FA 2003, and an amendment to ensure that a corporate trustee which is UK resident for the purposes of the Corporation Tax Acts cannot be ‘non-resident’ for the purposes of the non-resident surcharge.
Sch 20: Restriction of use of rebated diesel and biofuels: amendments 7–21 set out various changes to the revised treatment of red diesel, particularly around what is included in the definition of ‘agricultural vehicles’ for the purposes of the continuing availability of red diesel.
Sch 24: Penalties for deliberately withholding information: amendment 22 will ensure that references to ‘category 1 information’, for the purposes of penalties for deliberately withholding tax information, operate as intended by reference to ‘offshore matters’.
The Treasury has published explanatory notes to these report stage amendments.
It should be noted that the numbering of new clauses and new schedules applies for the purpose of the parliamentary process only. The clauses and schedules will be slotted into the Bill at the appropriate place after the amendments have been passed, which means subsequent clauses and schedules will be renumbered.
