Notice

VAT Notice 48: Extra Statutory Concessions

Updated 10 February 2022

Foreword

This notice cancels and replaces Notice 48 (May 2015). Details of any changes to the previous version can be found in paragraph 1.1 of this notice.

1. Introduction

1.1 What this notice is about

This notice gives details of all HM Revenue and Customs (HMRC) Extra Statutory Concessions (ESCs) in force at the time of publication.

This notice has been updated to include details of ESCs that have been granted, or become obsolete. ESCs 2.6 and 9.1 are obsolete.

1.2 What an Extra Statutory Concession is

In certain circumstances where remission or repayment of revenue is not provided for by law, the department may allow relief on an extra-statutory basis. ESCs are remissions of revenue that allow relief in specific sets of circumstances to all businesses falling within the relevant conditions. They’re authorised when strict application of the law would create a disadvantage or the effect would not be the one intended.

1.3 How ESCs are applied

HMRC ESCs are of general application. That is, a concession may be exercised by anyone to whom the circumstances set out in the concession apply without reference to HMRC. However, where an attempt is made to use an ESC for tax avoidance, the Commissioners may withdraw or restrict its application.

1.4 Agreements with trade bodies

In certain trades, particular arrangements for applying VAT and other charges have been agreed with the appropriate trade association. These are not ESCs and are listed in VAT Notice 700/57: administrative agreements entered into with trade bodies.

1.5 Former Inland Revenue ESCs

Former Inland Revenue ESCs are published in Extra-Statutory Concessions.

2. International field

2.1 VAT, excise and customs duties: goods and services

Duty (which includes all import and excise duties) and VAT are remitted or refunded in accordance with agreements with the authorities concerned on:

• goods and services imported by or supplied to visiting forces and their instrumentalities, for the official use of the force, or their instrumentalities
• goods and services imported by or supplied to NATO military headquarters, organisations or agencies, for their official use
• United States and Canadian Government expenditure on mutual defence or mutual aid contracts
• temporary importations of equipment required by contractors for fulfilling NATO infrastructure contracts or in connection with the provision and maintenance of US forces defence facilities in the UK

2.2 VAT, excise and customs duties: UK-manufactured alcoholic liquor and tobacco products purchased by diplomats

Obsolete. Overtaken by legislation – Customs & Excise (Personal Reliefs for Special Visitors) Order 1992.

2.3 VAT, excise and customs duties: United States Air Force

Relief from VAT or excise duty is allowed, in accordance with conditions agreed with the United States Air Force, on:

• charges for admission to air shows and open days
• goods sold by US forces organisations during air shows and open days to persons not entitled to receive/consume them unless customs charges have been paid

2.4 VAT and Customs Duty: gifts

Duty and VAT are remitted on gifts (whether imported or purchased in the UK) from United States forces to charitable organisations.

2.5 VAT: American war graves

In order to place inland purchases on the same footing as imported goods, VAT is remitted on the supply of goods and services to the American Battle Monuments Commission for the maintenance of the American Military Cemetery and Memorial at Maddingley, Cambridge and Brookwood, Surrey.

2.6 VAT: supplies to diplomatic missions, international organisations, NATO forces etc in other European Community (EC) countries

Obsolete – withdrawn with effect from 1 January 2021.

2.7 VAT and Customs Duty: certain aircraft ground and security equipment

The Convention on International Civil Aviation (Chicago Convention) allows relief from duty and VAT for certain ground and security equipment imported into the territory of one Contracting State by an airline of another Contracting State operating an international service. The UK is a signatory to the Chicago Convention.

Additionally, the UK has concluded a number of Air Service Agreements which allow, on a reciprocal basis, the various reliefs detailed in the Convention, including the one mentioned above.

We have become aware that end-use relief may be being claimed erroneously in these cases. Aircraft ground and security equipment does not qualify for end-use relief. We are in the process of drawing up a new procedure to enable the relief to be correctly claimed.

In the interim period an ESC has been agreed to allow relief for ground and security equipment to be claimed. The following list details those goods which qualify for relief and who is eligible to claim it.

2.7.1 Qualifying goods

The following ground and security equipment for aircraft:

(a) Repair, maintenance and servicing equipment:

• material for airframes, engines and instruments
• specialised aircraft repair kits
• starter batteries and carts
• maintenance platforms and steps
• test equipment for aircraft, aircraft engines, and instruments
• aircraft engine heaters and coolers
• ground radio equipment

(b) Passenger-handling equipment:

• passenger – loading steps
• specialised passenger-weighing devices
• specialised catering equipment

(c) Cargo-loading equipment:

• vehicles for moving or loading of baggage, cargo, equipment or supplies
• specialised cargo-loading devices
• specialised cargo-weighing devices

(d) Component parts for incorporation into ground equipment including the items listed above.

(e) Security equipment:

• weapon-detecting devices
• explosives-detecting devices
• intrusion detecting devices

(f) component parts for incorporation into security equipment.

Claims for relief of duty and VAT under this concession should be addressed to the Entry Processing Unit where the goods will be cleared with a copy of this advice.

2.8 Relief from UK excise duty on alcoholic drinks supplied duty paid in another member state for consumption on Eurostar trains which are in UK territory

Obsolete – withdrawn with effect from 1 January 2021.

3. VAT – concessions designed to remove inequities or anomalies in administration

3.1 VAT on purchase of road fuel

Obsolete. Legislated Finance Act 2013.

3.2 VAT: group supplies using an overseas member: anticipation of legislative changes

3.2.1 First part of concession

Obsolete. Legislated Finance Act 1997.

3.2.2 Second part of concession

Obsolete. Legislated Finance Act 2012.

3.3 VAT: zero rating of supplies of certain goods used in connection with collection of monetary donations

This concession applies to supplies to a charity of the following goods:

(a) lapel stickers or attachments designed to be worn on the lapel, which are of no intrinsic value, low cost to the charity and are given as a token in acknowledgement of a donation

(b) component parts of items described in (a) above when supplied for self assembly

(c) any form of receptacle which:

• is manufactured specifically for the purpose of collecting donated money
• is used solely for collecting money for charity
• is, or will be, clearly marked as collecting for a named charity
• can be secured by lock or tamper evident seal

(d) bucket lids, designed to fit buckets and provide a secure seal, for use solely in connection with collecting money for charity

(e) pre-printed letters the primary purpose of which is to appeal for money for charity (not necessarily including the addressees’ particulars)

(f) envelopes used in conjunction with letters described (e) above for forwarding donations, provided that they are over-printed with an appeal request related to that contained in the letter

(g) outer envelopes used in conjunction with letters described in (e) above, provided that they are over-printed with an appeal request related to that contained in the letter

(h) pre-printed collecting envelopes appealing for money (of the type used by the welfare charities and which are usually hand delivered to domestic premises)

(i) stewardship envelopes used for planned giving which, as a minimum requirement, are pre-printed with the name of the relevant place of worship or other charity

Where this concession applies, the supply may be treated as if it were a zero-rated supply.

This concession applies from 1 April 2000.

The Commissioners may withdraw or restrict the application of this concession if they have reasonable cause to believe it is being abused.

3.4 VAT: misunderstanding by a VAT trader

Obsolete – withdrawn with effect from 1 January 2012.

3.5 VAT: misdirection

Obsolete.

3.6 VAT: coin-operated machines

The tax point for supplies made from coin-operated machines is the date the machine is used. As an accounting convenience, however, operators may delay accounting for VAT until the takings are removed from a machine.

For all other purposes the normal tax point rules apply. Therefore in the event of a theft of takings from a machine, VAT must still be accounted for in full on any supplies that have been made from the machine.

3.7 VAT on minor promotional items supplied in linked supplies schemes

These are schemes in which a minor article is linked, although not necessarily physically linked, with a main article (of either goods or services) and sold with it at a single price. The price paid should normally be apportioned to reflect any difference where the items are liable to VAT at different rates.

However, if the minor article:

(a) is not charged to the customer at a separate price

(b) costs the supplier no more than 20% of the total cost of the combined supply (excluding VAT), and

(c) costs the supplier no more than:

• £1 (excluding VAT) if included with goods intended for retail sale
• £5 (excluding VAT) otherwise

the supplier may account for VAT on the minor article at the same rate as the main article – that is, no apportionment is necessary.

3.8 VAT: use of margin scheme for vehicle sales when incomplete records have been kept

Obsolete – withdrawn with effect from 1 April 2010.

3.9 VAT: recoveries under the VAT Act 1994 Schedule 11 paragraph 5

Where an amount is shown or represented as VAT on an invoice issued by a person who is neither registered nor required to be registered for VAT at the time when the invoice is issued, the provisions of Schedule 11 paragraph 5 of the VAT Act 1994 (formerly Schedule 7 paragraph 6 of the VAT Act 1983) enable the Commissioners to require that person to pay an equivalent amount to them.

The Act does not provide any relief in respect of related VAT incurred by such a person. On the grounds of equity, a person making such a payment may be permitted to deduct from it the amount of VAT incurred on supplies to him of goods and services that were directly attributable to any invoiced supply in respect of which such payment is required.

Where such a person has made a supply to a taxable person and, on the invoice, showed or represented an amount as VAT, the recipient of the supply has no logical entitlement to treat that amount as his input tax. If it’s clear that the taxable person who received the supply has treated such an amount as input tax in good faith, action to recover the amount so deducted may be remitted on grounds of equity.

3.10 VAT on necessary meals and accommodation provided by recognised representative sporting bodies to amateur sports persons chosen to represent that body in a competition

The VAT (Input Tax) Order 1992 (SI 1992 No 3222) (formerly the Value Added Tax (Special Provisions) Order 1981 (SI 1981 No 1741) as amended by the VAT (Special Provisions) (Amendment) Order 1988 (SI 1988 No 1124)) prevents input tax deduction where goods or services have been provided for the purposes of business entertainment except where this entertainment is of an employee.

The effect of this provision is to produce different treatment as between, for example, professional football teams and amateur football teams. This is because the professional players are employees of their clubs and input tax is deductible, while the amateur players are, by definition, not employees and input tax is blocked. This distinction between amateur and professional sportsmen has led to inequity in the VAT treatment of certain amateur representative bodies who are registered for VAT and account for output tax on ‘gate money’ in the same way as professional clubs, but cannot recover VAT on some of their genuine business expenses.

With the overwhelming number of clubs this has provided no problem as members’ subscriptions are regarded as being payment, in part, for any accommodation or meals that they may receive when playing for that club. However, problems have been encountered with certain bodies that choose, from affiliated clubs, individual amateur sports persons to represent their country or county. These persons so selected are not full subscribing members of the representational body. They pay a very small nominal subscription, or no subscription at all so the provision in VAT Notice 700/65: business entertainment cannot apply.

To remove this inequity of treatment as between professional and amateur bodies, it has been agreed that input tax necessarily incurred on the provision of accommodation and meals for team members selected by such representative bodies may be deductible as input tax. This concession not only applies to selected players but also to the committee members of the body who are to be treated as ‘persons engaged in the management of a company and deemed to be employees of that company’. The concession does not cover alcoholic drinks and tobacco (including cigarettes and cigars) provided for consumption by players and committee members.

3.11 VAT: incorrect customer declaration

Where a customer provides an incorrect declaration claiming eligibility for zero rating under Groups 2, 4, 5, 6, 8, 12 or 15 of the zero rate Schedule of the VAT Act 1994, or eligibility for a reduced rate under Group 1 of Schedule 7A for the qualifying use of fuel and power, and where a supplier, despite having taken all reasonable steps to check the validity of the declaration, nonetheless fails to identify the inaccuracy and in good faith makes the supplies concerned at the zero rate, or a reduced rate, HMRC will not seek to recover the tax due from the supplier.

3.12 VAT: buses with special facilities for carrying disabled persons

Obsolete – due to changes introduced in SI 2009/217 – The Value Added Tax (Input Tax) (Amendment) Order 2009.

3.13 VAT: repayment of import VAT to shipping agents and freight forwarders

Import VAT may be paid directly to shipping agents and freight forwarders where importers go into liquidation, or where an administrator or administrative receiver has been appointed who certifies that, in his or her opinion, ordinary unsecured creditors would receive nothing in liquidation, leaving the agents unable to recover VAT paid on their behalf. The importers must have gone into a formal state of insolvency or receivership within 6 months of the date of lodgement of the customs entry, and the goods must have remained under the agents’ control throughout their stay in the UK and have been re-exported unused from the EC.

3.14 VAT: zero rating of certain supplies of free zone goods

From 1 August 1991 the supply of goods subject to import VAT which are free zone goods in the UK may be zero rated on condition that there’s an agreement between the supplier and the customer that the customer will clear the goods for removal from the zone and will take responsibility for payment of the import VAT.

3.15 VAT: printed matter published in instalments

Books are zero rated for VAT under item 1 of Group 3 of Schedule 8 to the VAT Act 1994 (formerly item 1 of Group 3 of Schedule 5 to the VAT Act 1983). However, there’s a specialist area of the market known as continuity publishing or part-works where the product is supplied in parts over varying periods but builds up into a greater whole, such as, a loose-leaf book. Unless such items, when viewed independently, are books etc at the time of supply, they’re not entitled to zero rating under the present law.

From 1 February 1993 by way of concession, if, at the time of supply, an article is or was no by itself regarded as a book, including a loose-leaf book, qualifying for zero rating under item 1 of Group 3 of Schedule 8 to the VAT Act 1994, but is or was a part of a larger finite work which itself would fall under item 1 of Group 3 of Schedule 8 as a book, then the individual component parts may also be zero rated where they are or were being supplied either direct by the publisher or through a distribution chain to the final consumer.

From 26 October 1993 by way of further concession in relation to card-based boxed continuity series publications, such publications, even though not bound or held together other than in or by their container, and having all the other characteristics of a book, will for VAT purposes be treated as a book.

3.16 VAT: connection to the gas or electricity mains supply

Obsolete – withdrawn with effect from 1 January 2012.

3.17 VAT: zero rating of supplies of training for foreign governments

From 1 October 1993 the services of training (not being services comprised in any Group of Schedule 9 to the VAT Act 1994, formerly Schedule 6 to the VAT Act 1983), supplied to a foreign government in furtherance of its sovereign activities (and not its business activities), is liable to VAT at the zero rate provided the supplier retains a statement in writing from that government (or its accredited representative), that the trainees are employed in furtherance of its sovereign activities.

3.18 VAT: exemption for all domestic service charges

The concession exempts form 1 April 1994 all mandatory service charges or similar charges paid by the occupants of residential property towards the upkeep of the dwellings or block of flats in which they reside and towards the provision of a warden, caretakers, and people performing a similar function for those occupants. The concession does not exempt service charges paid in respect of holiday accommodation as defined in paragraph 1(e) of and Notes 11 13 to Group 1, Schedule 9, VAT Act 1994 (formerly paragraph 1(d) of and Notes (10) (10A) and (10B) to Group 1, Schedule 6, VAT Act 1983).

3.19 VAT: supplies of ‘relevant goods’ to charities

Where ‘relevant goods’ of a kind described in Note (3) to Group 15 of the VAT Act 1994 are supplied to a charity:

(a) whose sole purpose and function is to provide a range of care services to meet the personal needs of handicapped people (of which transport might form a part), or

(b) which provides transport services predominantly to handicapped people,

then by concession, the supply of those goods will be zero rated, as will the repair and maintenance of those goods and the supply of any further goods in connection with that repair and maintenance.

‘Handicapped’ means chronically sick or disabled.

In order to be eligible for this concession, a charity must demonstrate that it meets the requirements of sub-paragraphs (a) or (b) above by way of:

• its charitable aims and objectives
• its publicity and advertising material
• any documents which it has issued for the purpose of obtaining funding from a third party such as a local authority
• its day-to-day operations
• any other evidence that may be relevant

3.20 VAT: disapplication of Repayment of Input Tax (VAT Act 1994 Section 36 (4) A and the VAT Regulations 1995, SI 2518 (as amended by the VAT (Amendment) Regulations 1997 SI 1086)

Obsolete – legislated by SI 2017/495.

3.21 VAT: sales of poor quality goods

By concession, the supply by a charity of any goods which have been donated for sale or the supply of such goods by a taxable person who is covenanted by deed to give all the profits of that supply to a charity, shall be treated as zero rated, provided that:

(a) the supply is a sale of goods donated to that charity or taxable person, but

(b) the goods, although of a kind which the charity or taxable person makes available to the general public for purchase (whether in a shop or elsewhere) are by reason of their poor quality not fit to be so made available.

3.22 VAT: valuation of the refurbishment or fitting out of a building for the purposes of the capital goods scheme

Obsolete – withdrawn with effect from 1 January 2011.

3.23 VAT: supplies by Financial Ombudsman Services Ltd to ombudsman authorities

Obsolete – withdrawn with effect from 1 April 2017.

3.24 VAT: charities who provide care in an institution and also supply goods to disabled persons resident in their own and other institutions

1. This concession applies in relation to a supply of goods which, apart from Note (5B) to Group 12 of Schedule 8 to the VAT Act 1994, would fall within paragraph (g) of item 2 of that Group, where:

(a) the goods are goods other than spectacles or contact lenses, and are designed solely for use by a visually handicapped person

(b) the goods are supplied by a charity at or below cost

(c) the recipient of the supply is a resident or is attending the premises of a relevant institution as defined in Note (5I) to the said Group 12, and

(d) the charity is not actively engaged in supplying goods within paragraph (a) above solely to handicapped persons who are resident in or attending the premises of a relevant institution as defined by Note (5I) to the said Group 12 operated, managed or controlled by the charity.

2. Where this concession applies, the supply of the goods may be treated as if it were a zero-rated supply.

3. The Commissioners may withdraw or restrict the application of this concession if they have reasonable cause to believe it is being abused.

3.25 VAT: resuscitation training models supplied to charities and other eligible bodies for use in first aid training

1. The concession shall operate to include in Note (3) to Group 15 of Schedule 8 to the VAT Act 1994, the following:

(a) human resuscitation training models acquired for use in first aid training in either or both cardiopulmonary resuscitation and defibrillation techniques, and

(b) parts and accessories for use in or with the goods described in paragraph (a) above, where the parts and accessories are for use in the training of either or both cardiopulmonary resuscitation and defibrillation techniques.

2. In this concession resuscitation training model means a model which includes a head and torso designed for use in the training of cardiopulmonary resuscitation or defibrillation techniques.

3. In this concession cardiopulmonary resuscitation means a combination of expired air ventilation and chest compression.

4. The Commissioners may withdraw or restrict the application of this concession if they have reasonable cause to believe that it is being abused.

3.26 VAT: works of art, antiques and collectors’ items

The Value Added Tax (Treatment of Transactions) Order 1995 (SI1995/958) relieves from VAT certain transactions by treating them as neither a supply of goods nor a supply of services. This Order may also be applied, in the same way that it applies to works of art, to the following goods:

(a) all works of art falling within paragraph (a) of Annex I to Council Directive 77/388/EEC (inserted by Council Directive 94/5/EC) which do not already fall within the said order

(b) collectors’ items falling within paragraph (b) of the said Annex I, and

(c) antiques falling within paragraph (c) of the said Annex I.

3.27 VAT: use of the Auctioneers’ Scheme for sales of goods at auction on behalf of non-taxable persons

From 1 January 1999, an auctioneer selling, on behalf of a third party vendor who is a non-taxable person, goods which have been grown, made or produced (including bloodstock or livestock reared from birth) by that person, may enter the goods into the auctioneers’ scheme provided he holds a certificate from the vendor which includes:

(a) vendor’s full name and address

(b) description of goods and date of sale

(c) declaration that the vendor is not registered nor required to be registered for VAT

(d) signature of vendor and date

(e) signature of auctioneer and date

and all other conditions of the scheme must be met. The completed certificate must be retained with the relevant records for VAT purposes. An example of an acceptable certificate is set out below:

Certificate

AUCTIONEERS’ SCHEME FOR SECOND-HAND GOODS, WORKS OF ART, ANTIQUES AND COLLECTORS’ ITEMS

Extra-statutory concession number xx

Vendor’s Certificate for goods grown, made or produced and sold at auction on behalf of non-taxable persons

(full name)

of (address)

………………………………………………………………………………………………….

………………………………………………………………………………………………….

declare that I am not registered or required to be registered for VAT and that the goods detailed below are to be sold at auction on my behalf by (auctioneer’s name)

Description of goods

………………………………………………………………………………………………….

………………………………………………………………………………………………….

Date of sale (to be completed by auctioneer)

Signature of vendor

Signature of auctioneer

Date

3.28 VAT: supplies by Financial Services Authority to self-regulating organisations

Obsolete – withdrawn with effect from 1 April 2017.

3.29 VAT: charitable buildings

Obsolete – withdrawn with effect from 1 April 2010.

3.30 VAT: retail pharmacists

(1) This concession applies in relation to a supply of goods which, apart from Note (5A) to Group 12 of Schedule 8 to the VAT Act 1994, would fall within Item 1 of that Group, when:

(a) the goods supplied are dispensed to an individual for his/ her personal use while he/she is an inpatient or resident or while he/she is attending a relevant institution which is a hospital or nursing home

(b) the goods are ordered in accordance with section 41 of the National Health Service Act 1977, section 27 of the National Health Service (Scotland) Act 1978 or Article 63 of the Health and Personal Social Services (Northern Ireland) Order 1972

(c) the goods are dispensed in accordance with the National Health Service (Pharmaceutical Services) Regulations 1992, Schedule 1 to the National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 or the Pharmaceutical Services Regulations (Northern Ireland) 1997, and

(d) the person dispensing the goods is paid for doing so by the:

• Prescription Pricing Authority
• Prescription Information and Pricing Services Division of the Welsh Health Common Services Authority
• Pharmacy Practice Division of the Common Services Agency
• Central Services Agency

(2) Where this concession applies, the supply may be treated as if it were a zero-rated supply.

(3) The Commissioners may withdraw or restrict the application of the concession if they have reasonable cause to believe that it is being abused.

3.31 VAT: supplies by the Financial Services Compensation Scheme Ltd to compensation scheme authorities

Obsolete – withdrawn with effect from 1 April 2017.

3.32 VAT: electronic face value vouchers

Obsolete.

3.33 VAT: supplies previously made by the Post Office

Obsolete – due to changes in Group 3 of Schedule 9 to the VAT Act 1994 and the Postal Services Act 2011.

3.34 VAT: tax reclaimed by museums and galleries covered by Section 33A of The VAT Act 1994

1. Scope of this ESC

1.1 The government is committed to free public access to the main national museums and galleries. Ordinarily, when a museum or gallery moves from charging taxable entrance charges to free admission, it loses its entitlement to recover the VAT incurred on the related goods and services it purchases. This is because admitting the public free of charge is not a business activity and thus there is no entitlement to recover input tax in relation to it. The purpose of the scheme in Section 33A of the VAT Act 1994 (‘the Act’) is to refund this irrecoverable VAT to the bodies listed in an Order made under Section 33A(9). The entitlement to such refunds will commence from the date the Order takes effect in relation to the museum or gallery listed in it.

1.2 When a person recovers input tax on goods or services and subsequently transfers or uses them for a non-business purpose, a supply of the goods or services is deemed to have been made under paragraphs 5(1) or 5(4) of Schedule 4 to the Act (goods), or under Article 3 of the Value Added Tax (Supply of Services) Order 1993(SI 1993/1507) (services).

1.3 Furthermore, where input tax had been recovered in relation to a capital item as defined in regulation 113 of the Value Added Tax Regulations 1995, a move from taxable admission charges to non-business free access can have an effect on the proportion of taxable as opposed to exempt use of the capital item. This would result in adjustments of the input tax recovered under the normal operation of the capital goods scheme.

1.4 This ESC aims to ensure that the museums and galleries specified in an Order made under Section 33A (9) of the Act are not required to repay input tax, properly recovered at the time on goods and services used in connection with taxable supplies of admitting the public for payment, solely on account of the move to free admission.

1.5 The concession will not be extended to any situation where it appears to the Commissioners that its use will assist in avoiding VAT, and where it appears to them that the concession has been so used it will be treated as never having applied.

2. Operation of this ESC

2.1 Each of the following descriptions of transactions shall be treated as neither a supply of goods nor a supply of services, namely:

(a) goods which after purchase are subsequently put to a non-business use giving rise otherwise to a supply under paragraphs 5(1) or 5(4) of Schedule 4 to the Act; and

(b) services which after purchase are subsequently put to a non-business use giving rise otherwise to a supply under Article 3 of the Value Added Tax (Supply of Services) Order 1993.

This is providing in each case, that the change in use of the goods and services arose solely as a direct result of a body listed in an Order made under Section 33A(9) of the Act using the goods or services for the purpose of offering free rights of admission to the museum or gallery to which the Order specifies.

2.2 This paragraph applies to adjustments to the deduction of input tax on capital items under Part XV of the Value Added Tax Regulations 1995. Adjustment will not be required in so far as a change in use of a capital item relates to free admission with related refunds of VAT under Section 33A of the Act. Otherwise, adjustments are not affected. Where this paragraph applies, the owner of a capital item shall in each subsequent interval adjust the total input tax on the capital item and the extent of taxable use of the capital item for the purposes of Part XV as follows:

(a) the total input tax on the capital item shall be deemed to be the proportion that would have been input tax if admissions which have subsequently become free had been free at the time the VAT was incurred; and

(b) the extent of taxable use of the capital item at the time the original entitlement to deduction was determined shall be deemed to be the extent of taxable use at that time if admissions which have subsequently become free had been free at that time.

3. Dates when this ESC has effect

3.1 This ESC takes effect for each museum or gallery specified in an Order made under Section 33A(9) of the Act on the day appointed in the Order for that museum or gallery, whether or not the day appointed was before the date of publication of this concession.

3.35 VAT: apportionment of certain membership subscriptions to non-profit making bodies

Where a membership body supplies, in return for its membership subscription, a principal benefit, together with one or more ancillary benefits, it will normally have to treat the subscription as being in return for that principal benefit. This means that the body will have to ignore the liability to the VAT of the ancillary benefits and account for VAT on the whole subscription based on the liability to VAT of that principal benefit.

However bodies that are non-profit making and supply a mixture of zero rated, exempt and/or standard-rated benefits to their members in return for their subscriptions, may apportion such subscriptions to reflect the value and VAT liability of those individual benefits, without regard to whether there is one principal benefit. This concession may not be used for the purpose of tax avoidance.

3.36 VAT: imported works of art, antiques etc

Obsolete. Legislated SI 2009/730.

3.37 VAT: exemption for supplies of welfare services by private welfare agencies pending registration

Obsolete – withdrawn with effect from 9 December 2010.

4. Insurance Premium Tax (IPT) – concessions designed to remove inequities or anomalies in administration

4.1 IPT: special accounting introductory provisions

Obsolete – withdrawn with effect from 1 April 2010.

4.2 IPT: de minimis provisions

Obsolete. Legislated SI 2012/266.

4.3 IPT: insurance relating to motor cars or motor cycles

Obsolete. Legislated SI 2009/219.

4.4 IPT: home contents insurance

Obsolete – withdrawn with effect from 1 April 2010.

4.5 IPT: arrangements for discounted insurance

Obsolete. Legislated SI 2011/661.

5. Landfill Tax – concessions designed to remove inequities or anomalies in administration

5.1 Landfill Tax: used foundry sand

Obsolete – due to changes introduced in SI 2011/1017.

6. Excise duties – concessions designed to remove inequities or anomalies in administration

6.1 Excise – Hydrocarbon Oil Duty: duty paid deliveries for bonded users/distributors

Obsolete – withdrawn with effect from 1 April 2010.

6.2 Excise – Hydrocarbon Oil Duty: duty-paid deliveries for refinery boilers

Obsolete – withdrawn with effect from 1 April 2017.

6.3 Excise – Hydrocarbon Oil Duty: relief of duty on recovered motor spirit vapour

From 15 April 1993 duty relief may be allowed on motor spirit vapour recovered, during duty-paid deliveries of motor spirit from bonded mineral oil installations to service stations, and returned to bonded installations for conversion to liquid motor spirit.

6.4 Excise Duty – Hydrocarbon Oil Duty: fuel substitutes, additives and extenders

Obsolete.

6.5 Excise – spirits duty: the Alcoholic Liquor Duties Act (ALDA) 1979: application of sections 18 and 21 to the recovery of spirits by authorised duty-free spirits users

Obsolete.

6.6 Excise – spirits duty: the Methylated Spirits Regulations 1987: application of regulations 14 and 15 to the production and distribution of trade specific denatured alcohol

Obsolete. Replaced by The Denatured Alcohol Regulations 2005.

6.7 Excise – spirits duty: the Beer Regulations 1993: amendment to Part IX, Regulations 26-33, to make provision for repayment of duty on beer that is not of satisfactory quality in the case of beer that is not currently eligible for repayment of duty

Obsolete. Legislated SI 2008/1885.

6.8 Excise – spirits duty: deregulating the proportion of duty-free spirits that may be mixed with wine or made-wine in an excise warehouse

Sections 57 and 58 of ALDA enable the Commissioners of HMRC to permit, and impose conditions on, the mixing in an excise warehouse of duty-free spirits with wine or made-wine in a proportion not exceeding 12 litres of alcohol to 1 hectolitre of wine or made-wine.

That proportion may be disregarded under this concession so long as the resultant mixture does not assume the essential characteristics of a spirit (as defined in the Integrated Tariff of the UK).

However, the requirements in ALDA that the mixtures in question must not by virtue of the relevant provisions be raised to strengths greater than 22% remain unaffected.

This concession has been amended with effect from 27 April 2002.

6.9 Excise – warehoused goods: requirement for revenue traders to register

The Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (SI 1999/1278) require revenue traders who wish to deposit dutiable goods other than hydrocarbon oil (‘relevant goods’) in an excise warehouse, or purchase warehoused relevant goods, to be approved as registered owners.

As a concession, from 1 October 1999 the Commissioners will treat the definition of ‘relevant goods’ in regulation 2 as if it were amended so as to exclude wine and made-wine so that wine and made-wine will be treated in the same way as hydrocarbon oil is treated for the purposes of the Regulations. (Wine and made-wine are defined in sections 1(4) and 1(5) respectively of the Alcohol Liquor Duties Act 1979, which Act, by section 4(2), is to be construed as one Act with the HMRC Management Act 1979).

6.10 Excise – duty-free successor regime: goods in transit through the UK

Obsolete – due to changes introduced in SI 2010/592.

7. Climate Change Levy – concessions designed to remove inequities or anomalies in administration

7.1 Climate Change Levy: salt sector entitlement to a levy negotiated agreement

Obsolete – due to SI 2009/2458.

7.2 Climate Change Levy: exemption for certain recycling processes

Obsolete – from 1 April 2014 an exemption for mineralogical and metallurgical processes has been available under paragraph 12A of Schedule 6 to Finance Act 2000. Please read Excise Notice CCL1/3: Climate Change Levy – reliefs and special treatments for taxable commodities.

7.3 Climate Change Levy: exemptions, reduced rate and half rate – late notifications

Obsolete – withdrawn on 1 April 2003.

7.4 Climate Change Levy: simplified bad debt relief arrangements

Obsolete – withdrawn on 1 June 2003.

7.5 Climate Change Levy (CCL): exemption for certain non-fuel use of taxable commodities.

Obsolete – withdrawn on 30 June 2003.

8. Facilitation of exports

8.1 VAT: sail away boats

Obsolete – withdrawn with effect from 1 January 2012.

9. Non-commercial transactions

9.1 VAT on goods supplied at duty-free and tax-free shops

Obsolete – withdrawn with effect from 1 January 2021.

9.2 VAT: marine fuel

Commercial vessels engaged on voyages within UK territorial waters (or within the limits of a port), may receive certain types of marine fuel VAT free providing the conditions set out in Notice 703 VAT: Exports and removals of goods from the UK are met.

This relief extends only to those supplies of fuel which were zero rated prior to 1 July 1990 under the Value Added Tax Act 1983 Schedule 5 Group 7 item 4. It does not apply to petrol, DERV or lubricating oil.

9.3 VAT and excise duties: personal reliefs for goods permanently imported from third countries

Where property (including motor vehicles) which has been purchased in accordance with the terms of Article 15/10 of Directive 77/388/EEC and which otherwise qualifies for relief from payment of customs charges under Article 11 of HMRC Duties (Personal Reliefs for Goods Permanently Imported) Order 1992, relief is not to be refused solely by reason of Article 11.2 of that Order.

9.4 VAT and excise duties: personal reliefs for goods permanently imported from third countries

Where property (including motor vehicles) which has been purchased by members of UK forces (or by the civilian staff accompanying them) in countries outside the area of the EC and which otherwise qualifies for relief from payment of customs charges under Article 11 of the HMRC Duties (Personal Reliefs for Goods Permanently Imported) Order 1992, relief is not to be refused solely by reason of Article 11.2 of that Order.

9.5 VAT and excise duties: personal reliefs for goods permanently imported from third countries

Where property (including motor vehicles) which has been purchased under a UK export scheme by members of the UK diplomatic service, by members of UK forces or by civilian staff accompanying them or by members of international organisations and which otherwise qualifies for relief from payment of customs charges under Article 11 of the HMRC Duties (Personal Reliefs for Goods Permanently Imported) Order 1992, relief is not to be refused solely by reason of Article 11.2 of that Order.

9.6 VAT and excise duties: personal reliefs for goods permanently imported from third countries

Where personal belongings otherwise qualify for relief under Article 11 of the HMRC Duties (Personal Reliefs for Goods Permanently Imported) Order 1992 save only that the property has not been possessed and used for the specified period, then just as relief can be granted from customs duties as ‘special cases justified by the circumstances’ under Article 3 of Council Regulation 918/83, similar consideration shall apply in respect of VAT and excise duties and relief may be granted accordingly.

9.7 VAT and excise duties: personal reliefs for goods permanently imported from third countries

Where personal belongings otherwise qualify for relief under Article 11 of the HMRC Duties (Personal Reliefs for Goods Permanently Imported) Order 1992 save only that the property is declared for relief outside the specific periods, then just as relief can be granted from customs duties as special cases under Article 6, or under Article 9 of Council Regulation 918/83, similar consideration shall apply in respect of VAT and excise duties and relief may be granted accordingly.

10. Concessions obsolete since last edition of update 1 to Notice 48 (published October 2000)

10.1 VAT: group supplies using an overseas member: transitional relief

10.1.1 General

With effect from 26 November 1996, a resolution under the Provisional Collection of Taxes Act has created a new tax charge for the representative member of a VT group, where supplies of a type set out in Schedule 5 to the VAT Act 1994 are purchased by an overseas group member and used for making Schedule 5 supplies to a UK group member. This new tax charge was made permanent when the Finance Act 1997 was passed on 19 March 1997. The new tax charge is given effect by section 41 of the Finance Act, which inserts the new rules into section 43 of the VAT Act 1994 at paragraphs (2A) to (2E).

The time of the supply, which is taxed under section 41, is the time when the supply is paid for or, if the consideration is not in money, on the last day of the prescribed accounting period in which the services are performed. Under this concession, taxpayers may treat the introduction of the new charge under section 41 as though it were a change in the rate of VAT, and covered by section 88 of the VAT Act 1994.

This means that, where the UK group member has on, or after 26 November 1996, paid for services affected by section 41, but performance of those services took place to any extent before that date, the group may account for tax only on that proportion of the services which were performed on or after 26 November 1996. Further details are contained in VAT Notice 700: the VAT guide.

10.1.2 Telecommunications services

Telecommunications services are not currently affected by section 41 because they do not fall within Schedule 5 of the VAT Act 1994. However, it is possible that relevant telecommunications services will be so included shortly. When that happens, appropriate rules will be introduced to determine whether and when VAT should be accounted for on these telecommunications services provided by suppliers outside the UK, but received by customers within the UK. Accordingly, this concession does not apply to telecommunications services.

10.2 VAT: developer’s self supply on 1 March 1997

(a) The developer’s self supply on 1 March 1997 under paragraph 5(1)(b) of Schedule 10 to the VAT Act 1994 need not be treated as made where:

(b) construction of a building or civil engineering work is still in progress on 1 March 1997 and the value of the developer’s potential self-supply including those construction costs in paragraph 6(2)(b) of Schedule 10 to the VAT Act 1994 incurred both before and on or after 28 February 1997, would be less than £100,000, or

(c) a building or civil engineering work was completed before 1 March 1995 and either the:

• building is fully occupied or the civil engineering work is used by a ‘developer’ who is a taxable person for non-business purposes, rather than in connection with making any exempt supplies of goods or services, and consequently the ‘developer’ under paragraph 5(5) of Schedule 10 to the VAT Act 1994 would have been a taxable person under paragraph 5(4)(b) of that Schedule
• building has been fully occupied or the civil engineering work has been fully used before 1 March 1997
• building or civil engineering work is the subject of an election to waive exemption, and input tax has been provisionally recovered in the anticipation of granting a taxable interest in it

2. Examples of buildings or civil engineering works which might be within paragraph 1(b)(i) above are non-business NHS hospitals, government offices, and buildings and civil engineering works occupied or used by a local authority or similar body pursuant to its statutory non-business activities.

3. If a ‘developer’:

(a) has completed the construction of a building or civil engineering work before 1 March 1995, and

(b) considers that the building or work would not have been subject to the developer’s self-supply had the provisions in paragraph 5(1)(a) of Schedule 10 to the VAT Act 1994 continued after 28 February 1997, but the situation is not described in paragraphs 1(a) to 1(b) above.

then that person may make an individual request in writing to the Commissioners of HMRC not to be treated as making a developer’s self-supply on 1 March 1997.

Any reference in this concession to a building or civil engineering work includes a building or work which has been or is being reconstructed, enlarged or extended.

10.3 Landfill Tax: temporary disposal of material in designated areas for storage or sorting pending use in site restoration

1. For the purposes of Part IX of the Landfill Tax Regulations 1996:

(a) the following may be treated as a qualifying use:

• storage of qualifying material for later use in restoration of the landfill site
• sorting of material into qualifying material for storage for use, or for immediate use, in restoration of the landfill site and other material for disposal

(b) the relevant period as defined in regulation 38(5)(c) for the purposes of the application of regulation 38(2)(c) in respect of such use may be treated as being three years.

2. The concession applies only to disposals of material made on or after 1 October 1999.

3. Before applying this concession to any disposal, a site operator must apply to the Commissioners for an area to be designated under regulation 38 for, or in the case of an existing designated area for its designation to be amended to permit, the temporary disposal of material in the area pending all the material being put to the qualifying use set out in the concession.

4. Application of this concession is subject to compliance with all conditions imposed by or under Part IX of the above regulations applicable to, and to the operation of, the area designated for temporary disposals of material pending its being put to the qualifying use specified in the concession, including the record keeping requirement imposed by regulation 39.

10.4 Excise: imported tobacco products

Imported tobacco products may be delivered on importation without payment of tobacco products duty for deposit in premises registered under the Tobacco Products Regulations 1979 provided that the products are treated thereafter in all respects as if they had been manufactured in the UK.

10.5 IPT: special accounting scheme transitional arrangements

By concession, sections 21 to 23 of the Finance Act 1997 do not have effect in relation to a premium if the premium:

(a) is in respect of a pre 1 April 1997 contract, and

(b) falls, by virtue of regulations made under section 68 of the Finance Act 1994 (special accounting scheme) to be regarded for the purposes of Part III of that Act as received under the contract by the insurer on a date before 1 October 1997.

This concession does not apply where a contract of insurance is liable to the higher rate of IPT and provides for premiums to be paid on a monthly basis.

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