VATNIEU3330 - Supply and acquisition: acquisition: scope
The scope of the acquisition arrangements is set out in Article 2(1)(b) of the EU Principal VAT Directive and paragraphs 2(1) and 2(2) of Schedule 9ZA, VATA 1994.
2(1) NI acquisition VAT is charged on any acquisition from a member state of any goods where:
(a) the acquisition is a taxable acquisition,
(b) it takes place in Northern Ireland,
(c) it is not in pursuance of a taxable supply (see section 4(2)),
and
(d) the person who makes it is a taxable person or the goods acquired are subject to a duty of excise or consist in a new means of transport.
2(2) In this Act, a “taxable acquisition” means an acquisition of goods from a member state that:
(a) is not an exempt acquisition (see paragraph 17(5)), and
(b) falls within sub-paragraph (3) or is an acquisition of goods consisting in a new means of transport.
The requirement of paragraph 2(1)(c) that ‘the acquisition is otherwise than in pursuance of a taxable supply’ often causes confusion. What it means is that the supply to which the potential acquisition relates is not itself a taxable supply in Northern Ireland. In other words, most intra-single market movements of goods will be as a result of a supply by an EU supplier that takes place outside Northern Ireland - normally in the member state of removal (for more information about this see the manual covering place of supply of goods (VATPOSG). Consequently, it is not a ‘taxable supply’ as defined in UK law and so the goods are subject to UK acquisition requirements.
Furthermore, because the supply contemplated by paragraph 2(1)(c) is the supply that gives rise to the removal of the goods to Northern Ireland, it does not preclude an acquisition in cases where the goods are to be subject to an onward supply in Northern Ireland by the person receiving them.
But in some cases, the removal will be in respect of a supply that will be treated as taking place in Northern Ireland and so will represent a taxable supply within the meaning of the VAT Act. A good example of this is a supply that requires installation or assembly in Northern Ireland (see VATNIEU5100). The place of supply is Northern Ireland and so the supply is liable to UK VAT. No acquisition VAT is therefore due on the initial removal of the components to Northern Ireland.
Normally only goods received by UK(XI) taxable persons are treated as acquisitions. However, under paragraph 2(1)(d), goods subject to excise duty (see VATNIEU6400) and new means of transport (see the manual covering new means of transport) are exceptionally treated as acquisitions regardless of the status of the person acquiring them.