Value Added Tax: Scope of guidance
This section of the guidance covers Value Added Tax (VAT) and is intended to assist oils assurance officers with the control of VAT on ‘Motor and Heating Fuels’ in the various circumstances in which they are received or delivered.
The basic UK Law governing VAT is the Value Added Tax Act, 1994. The VAT Regulations, 1995 also affect imported and warehoused goods.
In addition most legal provisions relating to customs or excise duty, (including directly applicable EU customs legislation on imported goods) apply to VAT as if it were a duty on imported goods.
The main provision in UK law dealing with imported goods is the Customs and Excise Management Act 1979 (CEMA) as amended.
This guidance should be read in conjunction with Notice 179 as the notice now contains most of the information on ‘Motor and Heating Fuels’ required by both members of the oils trade and those staff involved in assurance for reference.
Notice 179 Part 15 covers VAT on warehoused oil.
Notice -701/19 ‘Fuel and Power’ explains how suppliers and users should treat supplies of fuel and power for VAT purposes.
Notice 702 - ‘VAT: Imports’ explains how imported goods are treated for VAT purposes.
Notice 702/8 gives information on the VAT treatment of goods entered into, supplied within and removed from fiscal warehouses.
Note: Information about fiscal warehousing was previously included in Notice 702/9 Warehouses and Free Zones, which has now been cancelled and replaced.
All relevant information about fiscal warehousing is now contained in 702/8.
Notice 702/9 ‘VAT: Imports - Customs procedures with economic impact, End-use Relief and Free zones’, explains the import VAT treatment of goods which are entered into and removed from customs suspension regimes, and free zones.
In addition it gives guidance on the treatment of supplies of goods whilst within the above regimes including whilst in customs warehousing and supplies of services associated with these goods.
Notice 703 - ‘VAT: Exports and Removals from the UK’, describes the VAT procedures, which apply to exports. It explains the conditions for zero-rating VAT on an export of goods. That is when the goods leave the European Union (EU). It also provides guidance on what exporters should do when they export goods in specific circumstances
The relevant VAT guidance is:
- IMPS: Imports
- VWRHS: VAT supplies in warehouse and fiscal warehousing
- VEXP: Exports and removals of goods from the UK
- VATSM: VAT: Single Market.
Reduced rates of VAT on oil supplied for a qualifying use
Supplies of oil delivered to home use are normally subject to the standard rate of VAT, but there is provision for a reduced rate in respect of supplies of fuel oil, gas oil, and kerosene for a qualifying use provided:
- They are not supplied as road fuel;
- They meet the excise definitions for tax types 561, 556, or 541; and
- They are chargeable with excise duty at the rebated rate or are relieved from excise duty (e.g. as Tied Oils under the terms of Notice 184A).
The reduced rate may also be applied to supplies of fuel oil, gas oil and kerosene where each supply is not more than 2,300 litres.
Petrol substitutes and gas for use as road fuel are chargeable at the standard rate of VAT.
For further information see Notice 701/19 ‘Fuel and Power’.