The Treasury has made the following two orders which deal with the treatment of interest in relation to amounts payable or repayable under the new VAT scheme for second-hand motor vehicles which are bought in Great Britain for resale in Northern Ireland or the EU.
The new scheme itself is introduced from 1 May 2023 by the VAT (Margin Schemes and Removal or Export of Goods: VAT-related Payments) Order, SI 2023/68.
1. Finance Act 2009 (VAT-related Payments) (Interest) (Appointed Day) Order, SI 2023/385: the order appoints 1 May 2023 as the date on which the late-payment and repayment interest provisions (FA 2009 ss 101 and 102 and related Schedules) apply for the purposes of amounts payable under the new scheme.
One point to note: claims under the new scheme by taxable persons which have a business establishment in the UK are required to be made through the VAT return (Article 7 of SI 2023/68). This means that the FA 2009 interest provisions already apply to those businesses (by virtue of applying generally for UK VAT purposes from 1 January 2023).
This new SI activates the interest provisions for claims made under Article 8 of SI 2023/68 (i.e. businesses which do not have a UK business establishment). It is also worth noting that HMRC is required to issue Directions setting out how claims are to be made under Article 8.
2. Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-related Payments) (Amendment) Order, SI 2023/412: the order makes changes to how late-payment and repayment interest apply in relation to claims under the new scheme by businesses which do not have a business establishment in the UK (under Article 8). For those claims, the changes are as follows:
repayment interest will start to run four months after the date of the claim (rather than running from the date of the claim, or the relevant filing date if later);
late-payment interest which has been paid incorrectly will be recovered as repayment interest, with set-off to be applied by HMRC as necessary;
HMRC will be able to recover late-payment interest under VATA 1994 s 77ZA (i.e. as if it were an amount of VAT).
The Treasury has made the following two orders which deal with the treatment of interest in relation to amounts payable or repayable under the new VAT scheme for second-hand motor vehicles which are bought in Great Britain for resale in Northern Ireland or the EU.
The new scheme itself is introduced from 1 May 2023 by the VAT (Margin Schemes and Removal or Export of Goods: VAT-related Payments) Order, SI 2023/68.
1. Finance Act 2009 (VAT-related Payments) (Interest) (Appointed Day) Order, SI 2023/385: the order appoints 1 May 2023 as the date on which the late-payment and repayment interest provisions (FA 2009 ss 101 and 102 and related Schedules) apply for the purposes of amounts payable under the new scheme.
One point to note: claims under the new scheme by taxable persons which have a business establishment in the UK are required to be made through the VAT return (Article 7 of SI 2023/68). This means that the FA 2009 interest provisions already apply to those businesses (by virtue of applying generally for UK VAT purposes from 1 January 2023).
This new SI activates the interest provisions for claims made under Article 8 of SI 2023/68 (i.e. businesses which do not have a UK business establishment). It is also worth noting that HMRC is required to issue Directions setting out how claims are to be made under Article 8.
2. Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-related Payments) (Amendment) Order, SI 2023/412: the order makes changes to how late-payment and repayment interest apply in relation to claims under the new scheme by businesses which do not have a business establishment in the UK (under Article 8). For those claims, the changes are as follows:
repayment interest will start to run four months after the date of the claim (rather than running from the date of the claim, or the relevant filing date if later);
late-payment interest which has been paid incorrectly will be recovered as repayment interest, with set-off to be applied by HMRC as necessary;
HMRC will be able to recover late-payment interest under VATA 1994 s 77ZA (i.e. as if it were an amount of VAT).
