VEXMOTORS1200 - Introduction: The law
The legal provisions that cover VAT zero-rating of vehicles supplied under the scheme are contained in VAT Act 1994, section 30(8) and the VAT Regulations 1995, Regulations 132 and 133 (in Great Britain) and Regulatiuons 133D and 133E (in Northern Ireland).
The VAT Act 1994
Section 30(8) permits the zero-rating of goods removed from the UK and supplied to a customer for export to a destination outside the UK. It also provides the authority for further regulations and conditions.
(8) Regulations may provide for the zero-rating of supplies of goods, or of such goods as may be specified in the regulations, in cases where-
(a) the Commissioners are satisfied that the goods have been or are to be exported to such places as may be specified in the regulations, and
(b) such other conditions, if any, as may be specified in the regulations or the Commissioners may impose are fulfilled.
Section 30(10) provides the legal basis for enforcement action in the event of non-exportation of goods supplied tax free for export, VEX90900 gives full details of how this should be used.
The VAT Regulations 1995
Regulation 132 permits the tax-free supply of a vehicle in Great Britian to an overseas visitor with 12 months use before the due date for export:
132(1) The Commissioners may, on application by an overseas visitor who intends to depart from Great Britain within 15 months and remain outside Great Britain for a period of at least 6 months, permit him within 12 months of his intended departure to purchase, from a registered person, a motor vehicle located in Great Britain at the time of its purchase without payment of VAT, for subsequent export, and its supply, subject to such conditions as they may impose, shall be zero-rated.
132(2) The conditions that the Commissioners may impose under paragraph (1) may be specified in a notice published by them.
Regulation 117 (8) providing the definition of Overseas visitor.
117(8) In regulation 132 ‘overseas visitor’ means a person who, during the 2 years immediately preceding the date of the application mentioned in regulation 132, has not been in Great Britian for more than 365 days, or who during 6 years immediately preceding the date of application has not been in Great Britian for more than 1095 days.
1059 days being 3 years
Regulation 133 permits the tax-free supply of a vehicle in Great Britain to anyone else with 6 months use before the due date for export:
133(1) The Commissioners may, on application by any person who intends to depart from Great Britain within 9 months and remain outside Great Britian for a period of at least 6 months, permit him within 6 months of his intended departure to purchase, from a registered person, a motor vehicle without payment of VAT, for subsequent export, and its supply, subject to such conditions as they may impose, shall be zero-rated.
133(2) The conditions that the Commissioners may impose under paragraph (1) may be specified in a notice published by them.
Regulations 133D and 133E provide the parrellel rules in Northern Ireland
133D(1) The Commissioners may, on application by an overseas visitor who intends to depart from the relevant states within 15 months and remain outside the relevant states for a period of at leat 6 months, permit that person within 12 months of the person’s intended departure to purchase, from a registered person, a motor vehicle located in Northern Ireland at the time of purchase without payment of VAT, for subsequent export, and its supply, subject to such conditions as they may impose, shall be zero-rated.
(2) The conditions that the Commissioners may impose under paragraph (1) may be specified in a notice published by them.
(3) In this regulation, ‘overseas visitor’ means a person who, during the 2 years immediately preceding the date of the application has not been in Northern Ireland for more than 365 days, or who, during the 6 years immediately preceding the date of application has not been in Northern Ireland more than 1095 days.
133E(1) The Commissioners may, on application by any person who intends to depart from the relevant states within 9 months and remain outside the relevant states for a period of at least 6 months, permit that person within 6 months of the person’s intended departure to purchase, from a registered person, a motor vehicle located in Northern Ireland at the time of purchase without payment of VAT, for subsequent export, and its supply, subject to such conditions as they may impose, shall be zero-rated.
(2) The conditions that the Commissioners may impose under paragraph (1) may be specified in a notice published by them.
Tertiary law
The regulations empower the Commissioners to set conditions which have force of law. The conditions are set out in VAT Notice 707 Personal Export Scheme.