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HMRC internal manual

VAT Valuation Manual

Valuation of acquisitions: special valuation rules for acquisitions - Schedule 7, VATA 1994

Paragraph 1

Provides for the issue of Notices of Direction when a transaction involves an acquisition and the parties are connected persons. The principles applied correspond to those applied under paragraph 1 of Schedule 6 (see VATVAL07300).

Paragraph 2

Does not correspond to any paragraph of Schedule 6 and provides as follows:

2(1) Where, in such cases as the Commissioners may by regulations prescribe, goods acquired in the United Kingdom from another member State -

(a) are charged in connection with their removal to the United Kingdom with a duty of excise; or

(b) on that removal are subject, in accordance with any provision for the time being having effect for transitional purposes in connection with the accession of any State to the European Communities, to any Community customs duty or agricultural levy of the Economic Community,

then the value of the relevant transaction shall be taken for the purposes of this Act to be the sum of its value apart from this paragraph and the amount, so far as not already included in that value, of the duty or, as the case may be, agricultural levy which has been or is to be paid in respect of those goods.

2(2) Sub-paragraph (1) above shall not require the inclusion of any amount of duty or agricultural levy in the value of a transaction in pursuance of which there is an acquisition of goods which, under subsection (4) of section 18, is treated as taking place before the time which is the duty point within the meaning of that section.

The effect of this provision is to ensure that any duties or levies are included in the value upon which VAT is calculated.

Paragraph 3

Provides for the valuation of acquisitions for no consideration and applies the same principles as paragraph 6 of Schedule 6 (see VATVAL08700).

Paragraph 4

Provides for the valuation of acquisitions where the transactions are expressed in foreign currencies and applies the same principles as paragraph 11 of Schedule 6 (see VATVAL09500).

Paragraph 5

Contains definitions of the terms relevant transaction and the relevant time as used throughout the Schedule:

  1. In this Schedule -

“relevant transaction”, in relation to any acquisition of goods from another member State, means the transaction in pursuance of which the goods are acquired;

“the relevant time”, in relation to any such acquisition, means -

(a) If the person by whom the goods are acquired is not a taxable person and the time of acquisition does not fall to be determined in accordance with regulations made under section 12(3), the time of the event which, in relation to that acquisition, is the first relevant event for the purposes of taxing the acquisition; and

(b) In any other case, the time of acquisition.