On January 27, 2016 the UK Government published Draft Legislation: VAT use and enjoyment provisions for insurance repair services. The UK Government has opened a technical consultation with respect to this Draft Legislation. The technical consultation will be open until February 29, 2016.

 

In Summer Budget 2015 the UK government announced that it would introduce a use and enjoyment provision to counter tax avoidance involving the provision of repair services, carried out under a contract of insurance, to insurers located outside the EU.

 

The Draft legislation inserts a new paragraph, 9D, into Part 2 of Schedule 4A(b) to the Value Added Tax Act 1994 (place of supply of services: exceptions relating to supplies made to relevant business person), which applies to the supply of services to a relevant business person consisting of the repair of tangible moveable property pursuant to a claim made under a contract of insurance. If those services, on the application of the usual rules, would be treated as being made in the UK but are effectively used and enjoyed outside the territories of the member States or would be treated as being made outside the territories of the member States but are effectively used and enjoyed in the UK, the services will be treated as being made where they are used and enjoyed.

 

The following documents were published:

·        The VAT (Place of Supply of Services: Exceptions Relating to Supplies Made to Relevant Business Person) Order 2016

·        Explanatory memorandum to the VAT (place of supply of services: exceptions relating to supplies made to relevant business person) order 2016

 

Interested parties that would like to respond to the consultation can find further information on how to do that in the press release issued by the HM Revenue & Customs in this respect. Click here to be forwarded to the press release as issued by the HMRC.

 

 

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