Finance Act, 1997

Amendment of section 10 (amount on which tax is chargeable) of Principal Act.

102.—Section 10 of the Principal Act is hereby amended—

(a) in subsection (3) by the addition of the following paragraph:

“(d) If, following the issue of an invoice by a taxable person in respect of a supply of goods or services, the person who issued the invoice allows a reduction or discount in the amount of the consideration due in respect of that supply, the relief referred to in paragraph (c) shall not be given until the person who issued the invoice issues the credit note required in accordance with the provisions of section 17(3)(b) in respect of that reduction or discount.”,

(b) by the addition of the following proviso to subsection (4):

“Provided that where the supply in question is a supply of immovable goods, (hereafter referred to in this proviso as ‘appropriation’), the cost to the person making that appropriation shall include an amount equal to the amount on which tax was chargeable on the supply of those goods to that person, being the last supply of those goods to that person which preceded the appropriation.”,

(c) in subsection (7)—

(i) in paragraph (c) by the insertion before “supplies” of “subject to subsection (7A),”, and

(ii) by the deletion of paragraph (d),

(d) by the insertion of the following subsection after subsection (7):

“(7A) (a) Where a supplier sells a voucher to a buyer at a discount and promises to subsequently accept that voucher at its face value in full or part payment of the price of goods purchased by a customer who was not the buyer of the voucher, and who does not normally know the actual price at which the voucher was sold by the supplier, the consideration represented by the voucher shall, subject to regulations, if any, be the sum actually received by the supplier upon the sale of the voucher.

(b) Paragraph (a) is for the purpose of giving further effect to Article 11A.1.(a) of Council Directive No. 77/388/EEC of 17 May 19771 , and shall be construed accordingly.”,

(e) in subsection (9), by the addition of the following proviso to paragraph (b):

“Provided that where a surrender or an assignment of an interest in immovable goods is a supply of immovable goods which is chargeable to tax, the open market price of such interest shall be determined as if the person who surrendered or assigned that interest were disposing of an interest in those goods which that person had created for the period between the date of the surrender or assignment and the date on which that surrendered or assigned interest would, but for its surrender or assignment, have expired.”,

and

(f) by the substitution of the following subsection for subsection (10):

“(10) In this section—

‘interest’, in relation to immovable goods, and ‘disposal’ in relation to any such interest, shall be construed in accordance with section 4 (1), provided that for the purposes of determining the open market price of a surrendered or assigned interest in accordance with the proviso to paragraph (b) of subsection (9), an interest in immovable goods shall also mean an estate or interest which, when it was created, was for a period equal to the period referred to in that proviso, regardless of the duration of that period;

‘the open market price’—

(a) in relation to the value of an interest in immovable goods which is not a freehold interest, means the price, excluding tax, which the right to receive an unencumbered rent in respect of those goods for the period of the interest would fetch on the open market at the time that that interest is disposed of, and

(b) in relation to the supply of any other goods or services or the intra-Community acquisition of goods, means the price, excluding tax, which the goods might reasonably be expected to fetch or which might reasonably be expected to be charged for the services if sold in the open market at the time of the event in question;

‘unencumbered rent’, for the purposes of valuing an interest in immovable goods, means the rent at which an interest would be let, if that interest was let on the open market free of restrictive conditions.”.

1O.J. No. L145 of 13 June 1977, p. 1.