Finance Act, 1995

Special scheme for means of transport supplied by taxable dealers.

130.—The Principal Act is hereby amended by the insertion of the following section after section 12A:

“12B.—(1) Where a taxable dealer supplies a means of transport, the residual tax which is deductible in accordance with section 12 (1) (a) (vi) shall be deemed to be tax and shall be the amount referred to in subsection (4).

(2) The entitlement to deduct residual tax referred to in subsection (1) shall arise only where a taxable dealer purchases or acquires—

(a) a means of transport from a person, other than a person referred to in subsection (10), who was not entitled to deduct, under section 12, any tax in respect of that person's purchase, intra-Community acquisition or importation of that means of transport, or

(b) a means of transport other than a new means of transport from a person in another Member State who was not entitled to deduct, under the provisions implementing Article 17 of Council Directive No. 77/388/EEC of 17 May 1977 in that Member State, any value-added tax referred to in that Directive in respect of that person's purchase, intra-Community acquisition or importation of that means of transport, or

(c) a means of transport from a taxable person who has exercised the entitlement under section 12 (1) (a) (vi) to deduct the residual tax in respect of that person's supply of that means of transport to the said dealer, or

(d) a means of transport other than a new means of transport from a taxable dealer in another Member State who has applied the provisions implementing Article 26a or 28o (inserted by Council Directive No.94/5/EC of 14 February 1994) of Council Directive No. 77/388/EEC of 17 May 1977 to the supply of that means of transport, in that other Member State.

(3) In this section—

‘taxable dealer’ means a taxable person who in the course or furtherance of business, whether acting on that person's own behalf, or on behalf of another person pursuant to a contract under which commission is payable on purchase or sale, purchases or acquires means of transport as stock-in-trade with a view to resale, and a person in another Member State shall be deemed to be a taxable dealer where, in similar circumstances, that person would be a taxable dealer in the State under this section;

‘means of transport’ means motorised land vehicles with an engine cylinder capacity exceeding 48 cubic centimetres or a power exceeding 7.2 kilowatts, vessels exceeding 7.5 metres in length and aircraft with a take-off weight exceeding 1,550 kilogrammes, which are intended for the transport of persons or goods, other than vessels and aircraft of the kind referred to in paragraph (v) of the Second Schedule.

(4) The residual tax which may be deducted by a taxable dealer in accordance with section 12 (1) (a) (vi) shall be the residual tax deemed to be included in the purchase price payable by such dealer when acquiring a means of transport and shall be determined by the formula—

A ×

B

________

B + 100

where—

A is the purchase price of the means of transport, and

B is the percentage rate of tax specified—

(a) in section 11 (1) (a) where the means of transport is deemed to be supplied within the State to the taxable dealer, or

(b) in provisions implementing Article 12 (1) of Council Directive No. 77/388/EEC of 17 May 1977 in another Member State where the means of transport is deemed to be supplied within that Member State to the taxable dealer:

Provided that, subject to subsection (8), where the amount so calculated is in excess of the tax chargeable on the supply by the taxable dealer of the means of transport, the residual tax shall be an amount equal to the amount of tax chargeable on that supply.

(5) Notwithstanding section 17, where a taxable dealer deducts residual tax referred to in subsection (1) in respect of a supply of a means of transport, that dealer shall not indicate separately the amount of tax chargeable in respect of that supply on any invoice or other document issued in lieu thereof in accordance with that section.

(6) Notwithstanding section 3 (6) (d), in the case of a supply of a means of transport which is dispatched or transported and where—

(a) a taxable dealer deducts residual tax referred to in subsection (1) in respect of the supply of that means of transport, or

(b) a taxable dealer in another Member State has applied the provisions implementing Article 26a or 28o of Council Directive No. 77/388/EEC of 17 May 1977 in that other Member State, to the supply of that means of transport,

the place of supply shall be deemed to be the place where the dispatch or transportation begins.

(7) Where a taxable dealer deducts residual tax referred to in subsection (1) in respect of a supply of a means of transport, then, subject to subsection (8), the provisions of section 11 (1) (b) shall not apply in respect of that supply.

(8) Notwithstanding subsection (7), where a taxable dealer deducts residual tax referred to in subsection (1) in respect of the supply of a new means of transport dispatched or transported by the supplier to a person in another Member State, the provisions of section 11 (1) (b) shall apply, and in determining the amount of the residual tax in accordance with subsection (4) the proviso to that subsection shall not apply.

(9) Where a taxable dealer supplies a means of transport on behalf of another person pursuant to a contract under which commission is payable on purchase or sale, the means of transport shall be deemed to have been supplied by that other person to the taxable dealer when the said taxable dealer supplies that means of transport.

(10) Notwithstanding paragraph (xxiv) of the First Schedule, the provisions of that paragraph shall not apply to—

(a) a supply by a taxable person of a means of transport, other than a motor vehicle as defined in section 12 (3) (b), which that person acquired from a taxable dealer who deducted residual tax in respect of the supply of that means of transport to that person, and

(b) a supply by a taxable person other than a taxable dealer of a motor vehicle, as defined in section 12 (3) (b), which that person acquired as stock-in-trade or for the purposes of a business which consists in whole or part of the hiring of motor vehicles or for use, in a driving school business, for giving driving instruction, from a taxable dealer who deducted residual tax in respect of the supply of that motor vehicle to that person.”.