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Finance Act 1989 (c. 26)

(The document as of February, 2008)

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SCHEDULE 2 Vehicles Excise Duty: Special Machines

1 The [1971 c. 10.] Vehicles (Excise) Act 1971 and the [1972 c. 10 (N.I.).] Vehicles (Excise) Act (Northern Ireland) 1972 shall be amended as follows.

2 In Part I of Schedule 3 to each Act (annual rates of duty on tractors etc.)--

(a) after paragraph 1 there shall be inserted--

" 1A. In this Schedule "special machine" means--

(a) a tractor;

(b) an agricultural engine;

(c) a digging machine;

(d) a mobile crane;

(e) a works truck; or

(f) a mowing machine. " ;

(b) for paragraph 2 there shall be substituted--

" 2. In this Schedule "tractor" means a vehicle which is either--

(a) an agricultural tractor, or

(b) a tractor (other than an agricultural tractor) that is--

(i) designed and constructed primarily for use otherwise than on roads, and

(ii) incapable by reason of its construction of exceeding a speed of twenty-five miles per hour on the level under its own power. " ;

(c) in paragraph 3(b), for the words "neither carries nor hauls any load than" there shall be substituted the words "does not carry any load except";

(d) in paragraph 4(b), for the words "neither carries nor hauls any load than" there shall be substituted the words "does not carry any load except";

(e) paragraph 5A shall be omitted; and

(f) in paragraph 6, for the words from "(other than" to "8 below)" there shall be substituted the words "(other than a special machine, a recovery vehicle or a vehicle to which Schedule 4A to this Act applies)".

3 In Part II of Schedule 3 to each Act, in column 1, for paragraph 1 there shall be substituted--

" 1. Special machines. "

4 In Part I of Schedule 4 to each Act (annual rates of duty on goods vehicles)--

(a) in paragraph 11, for sub-paragraphs (b) and (c) there shall be substituted--

" (b) a special machine within the meaning of Schedule 3 to this Act;

(c) a recovery vehicle within the meaning of that Schedule; or " ;

(b) paragraphs 12 and 13 shall be omitted; and

(c) in paragraph 15(1), the definitions of "agricultural machine", "fisherman's tractor", "mobile crane", "recovery vehicle" and "works truck" shall be omitted.



Section 18.

SCHEDULE 3 Value Added Tax: Buildings and Land



Zero-rating

1 For Group 8 (construction of buildings etc.) of Schedule 5 (zero-rating) to the [1983 c. 55.] Value Added Tax Act 1983 there shall be substituted--



" Group 8--Construction of Dwellings, Etc.

Item No.

1 The grant by a person constructing a building--

(a) designed as a dwelling or number of dwellings; or

(b) intended for use solely for a relevant residential purpose or a relevant charitable purpose,

of a major interest in, or in any part of, the building or its site.

2 The supply in the course of the construction of--

(a) a building designed as a dwelling or number of dwellings or intended for use solely for a relevant residential purpose or a relevant charitable purpose; or

(b) any civil engineering work necessary for the development of a permanent park for residential caravans,

of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity.

3 The supply to a person of--

(a) materials; or

(b) builders' hardware, sanitary ware or other articles of a kind ordinarily installed by builders as fixtures,

by a supplier who also makes to the same person supplies within item 2 of this Group or Group 8A below of services which include the use of the materials or the installation of the articles.

Notes:

(1) "Grant" includes assignment.

(2) "Dwelling" includes a garage constructed at the same time as a dwelling for occupation together with it.

(3) Use for a relevant residential purpose means use as--

(a) a home or other institution providing residential accommodation for children;

(b) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder;

(c) a hospice;

(d) residential accommodation for students or school pupils;

(e) residential accommodation for members of any of the armed forces;

(f) a monastery, nunnery or similar establishment; or

(g) an institution which is the sole or main residence of at least 90 per cent. of its residents,

except use as a hospital, a prison or similar institution or an hotel, inn or similar establishment.

(4) Use for a relevant charitable purpose means use by a charity in either or both of the following ways, namely--

(a) otherwise than in the course or furtherance of a business;

(b) as a village hall or similarly in providing social or recreational facilities for a local community.

(5) Where part of a building is designed as a dwelling or number of dwellings or intended for use solely for a relevant residential purpose or a relevant charitable purpose (and part is not)--

(a) a grant or other supply relating only to the part so designed or intended for such use (or its site) shall be treated as relating to a building so designed or intended for such use;

(b) a grant or other supply relating only to the part neither so designed nor intended for such use (or its site) shall not be so treated; and

(c) in the case of any other grant or other supply relating to, or to any part of, the building (or its site), an apportionment shall be made to determine the extent to which it is to be so treated.

(6) Where all or part of a building is intended for use solely for a relevant residential purpose or a relevant charitable purpose--

(a) a supply relating to the building (or any part of it) shall not be taken for the purposes of item 2 or 3 as relating to a building intended for such use unless it is made to a person who intends to use the building (or part) for such a purpose; and

(b) a grant or other supply relating to the building (or any part of it) shall not be taken as relating to a building intended for such use unless before it is made the person to whom it is made has given to the person making it a certificate in such form as may be specified in a notice published by the Commissioners stating that the grant or other supply (or a specified part of it) so relates.

(7) The grant of an interest in, or in part of, a building designed as a dwelling or number of dwellings is not within item 1 if--

(a) the interest granted is such that the grantee will not be entitled to reside in the building, or part, throughout the year; or

(b) residence there throughout the year will be prevented by the terms of a covenant, statutory planning consent or similar permission.

(8) Where the major interest referred to in item 1 is a tenancy or lease--

(a) if a premium is payable, the grant falls within that item only to the extent that it is made for consideration in the form of the premium; and

(b) if a premium is not payable, the grant falls within that item only to the extent that it is made for consideration in the form of the first payment of rent due under the tenancy or lease.

(9) The reference in item 2 to the construction of a building or work does not include a reference to--

(a) the conversion, reconstruction, alteration or enlargement of an existing building or work; or

(b) any extension or annexation to an existing building which provides for internal access to the existing building or of which the separate use, letting or disposal is prevented by the terms of any covenant, statutory planning consent or similar permission;

and the reference in item 1 to a person constructing a building shall be construed accordingly.

(10) A caravan is not a residential caravan if residence in it throughout the year is prevented by the terms of a covenant, statutory planning consent or similar permission.

(11) Item 2 does not include the supply of services described in paragraph 1(1) or 5(3) of Schedule 2 to this Act.

(12) The goods referred to in item 3 do not include--

(a) finished or prefabricated furniture, other than furniture designed to be fitted in kitchens;

(b) materials for the construction of fitted furniture, other than kitchen furniture;

(c) domestic electrical or gas appliances, other than those designed to provide space heating or water heating or both; or

(d) carpets or carpeting material.

(13) Section 16(3) of this Act does not apply to goods forming part of a description of supply in this Group. "

2 (1) Group 8A (protected buildings) of that Schedule shall be amended as follows.

(2) In item 1, for the word "granting" there shall be substituted the word "grant".

(3) In Note (1), for the words "a building which" there shall be substituted the words "a building which is designed to remain as or become a dwelling or number of dwellings or is intended for use solely for a relevant residential purpose or a relevant charitable purpose after the reconstruction or alteration and which, in either case,".

(4) After that Note there shall be inserted--

" (1A) Notes (1) to (8) to Group 8 above apply in relation to this Group as they apply in relation to that Group. "

(5) Note (5) shall be omitted.

(6) After Note (6) there shall be inserted--

" (6A) For the purposes of item 2 the construction of a building separate from, but in the curtilage of, a protected building does not constitute an alteration of the protected building. "

(7) The following Note shall be substituted for Note (7)--

" (7) Item 2 does not include the supply of services described in paragraph 1(1) or 5(3) of Schedule 2 to this Act. "

3 In Group 11 (caravans and houseboats) of that Schedule, for paragraph (b) of the Note there shall be substituted--

" (b) the supply of accommodation in a caravan or houseboat. "



Exemptions

4 (1) For Group 1 (land) of Schedule 6 (exemptions) to the [1983 c. 55.] Value Added Tax Act 1983 there shall be substituted--



" Group 1 – Land

Item No.

1 The grant of any interest in or right over land or of any licence to occupy land, other than--

(a) the grant of the fee simple in--

(i) a building which has not been completed and which is neither designed as a dwelling or number of dwellings nor intended for use solely for a relevant residential purpose or a relevant charitable purpose;

(ii) a new building which is neither designed as a dwelling or number of dwellings nor intended for use solely for a relevant residential purpose or a relevant charitable purpose after the grant;

(iii) a civil engineering work which has not been completed;

(iv) a new civil engineering work;

(b) the grant of any interest, right or licence consisting of a right to take game or fish;

(c) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering;

(d) the provision of holiday accommodation in a house, flat, caravan, houseboat or tent;

(e) the provision of seasonal pitches for caravans, and the grant of facilities at caravan parks to persons for whom such pitches are provided;

(f) the provision of pitches for tents or of camping facilities;

(g) the grant of facilities for parking a vehicle;

(h) the grant of any right to fell and remove standing timber;

(i) the grant of facilities for housing, or storage of, an aircraft or for mooring, or storage of, a ship, boat or other vessel;

(j) the grant of any right to occupy a box, seat or other accommodation at a sports ground, theatre, concert hall or other place of entertainment; and

(k) the grant of facilities for playing any sport or participating in any physical recreation.

Notes:

(1) "Grant" includes an assignment, other than an assignment of an interest made to the person to whom a surrender of the interest could be made.

(2) A building shall be taken to be completed when an architect issues a certificate of practical completion in relation to it or it is first fully occupied, whichever happens first; and a civil engineering work shall be taken to be completed when an engineer issues a certificate of completion in relation to it or it is first fully used, whichever happens first.

(3) Notes (2) to (6) to Group 8 of Schedule 5 to this Act apply in relation to this Group as they apply in relation to that Group.

(4) A building or civil engineering work is new if it was completed less than three years before the grant.

(5) Subject to Note (6), the grant of the fee simple in a building or work completed before 1st April 1989 is not excluded from this Group by paragraph (a)(ii) or (iv).

(6) Note (5) does not apply where the grant is the first grant of the fee simple made on or after 1st April 1989 and the building was not fully occupied, or the work not fully used, before that date.

(7) Where a grant of an interest in, right over or licence to occupy land includes a valuable right to take game or fish, an apportionment shall be made to determine the supply falling outside this Group by virtue of paragraph (b).

(8) "Similar establishment" includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by or held out as being suitable for use by visitors or travellers.

(9) "Houseboat" includes a houseboat within the meaning of Group 11 of Schedule 5 to this Act.

(10) "Holiday accommodation" includes any accommodation advertised or held out as such.

(11) A seasonal pitch is a pitch--

(a) which is provided for a period of less than a year; or

(b) which is provided for a year or a period longer than a year but which the person to whom it is provided is prevented by the terms of any covenant, statutory planning consent or similar permission from occupying by living in a caravan at all times throughout the period for which the pitch is provided.

(12) "Mooring" includes anchoring or berthing.

(13) Paragraph (k) shall not apply where the grant of the facilities is for--

(a) a continuous period of use exceeding twenty-four hours; or

(b) a series of ten or more periods, whether or not exceeding twenty-four hours in total, where the following conditions are satisfied--

(i) each period is in respect of the same activity carried on at the same place;

(ii) the interval between each period is not less than one day and not more than fourteen days;

(iii) consideration is payable by reference to the whole series and is evidenced by written agreement;

(iv) the grantee has exclusive use of the facilities; and

(v) the grantee is a school, a club, an association or an organisation representing affiliated clubs or constituent associations. "

(2) In consequence of the amendment made by sub-paragraph (1) above, in paragraph 9(1) of Schedule 4 to the [1983 c. 55.] Value Added Tax Act 1983 for "(a)" there shall be substituted "(c)".



Other provisions

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5 The following section shall be substituted for section 21 (refund of tax to person constructing dwelling) of the Value Added Tax Act 1983--

" 21 Refund of tax to persons constructing certain buildings

(1) Subject to subsection (2) below, where tax is chargeable on the supply of goods to, or the importation of goods by, a person constructing a building lawfully and otherwise than in the course or furtherance of any business, and--

(a) the goods are incorporated in the building or its site; and

(b) the supply of the goods would have been zero-rated by virtue of item 3 of Group 8 of Schedule 5 to this Act if they had been supplied by a supplier making to the same person supplies within item 2 of that Group of services including their use or installation, and any required certificate had been given,

the Commissioners shall, on a claim made in that behalf, refund to the person the amount of the tax so chargeable.

(2) The Commissioners shall not be required to entertain a claim for a refund of tax under this section unless the claim--

(a) is made within such time and in such form and manner;

(b) contains such information; and

(c) is accompanied by such documents, whether by way of evidence or otherwise,

as the Commissioners may by regulations prescribe. "

6 (1) The following section shall be inserted in the [1983 c. 55.] Value Added Tax Act 1983 after section 35--

" 35A Buildings and land

(1) Schedule 6A to this Act shall have effect with respect to buildings and land.

(2) The Treasury may by order amend Schedule 6A to this Act. "

(2) The following Schedule shall be inserted in the Value Added Tax Act 1983 after Schedule 6--



Section 35A.

" Schedule 6A Buildings and Land



Residential and charitable buildings: change of use etc.

1 (1) In this paragraph "relevant zero-rated supply" means a grant or other supply taking place on or after 1st April 1989 which--

(a) relates to a building intended for use solely for a relevant residential purpose or a relevant charitable purpose or part of such a building; and

(b) is zero-rated, in whole or in part, by virtue of Group 8 of Schedule 5 to this Act.

(2) Sub-paragraph (3) below applies where--

(a) one or more relevant zero-rated supplies relating to a building (or part of a building) have been made to any person;

(b) within the period of ten years beginning with the day on which the building is completed, the person grants an interest in, right over or licence to occupy the building or any part of it (or the building or any part of it including, consisting of or forming part of the part to which the relevant zero-rated supply or supplies related); and

(c) after the grant the whole or any part of the building, or of the part to which the grant relates, (or the whole of the building or of the part to which the grant relates, or any part of it including, consisting of or forming part of the part to which the relevant zero-rated supply or supplies related) is not intended for use solely for a relevant residential purpose or a relevant charitable purpose.

(3) Where this sub-paragraph applies, to the extent that the grant relates to so much of the building as--

(a) by reason of its intended use gave rise to the relevant zero-rated supply or supplies; and

(b) is not intended for use solely for a relevant residential purpose or a relevant charitable purpose after the grant,

it shall be taken to be a taxable supply in the course or furtherance of a business which is not zero-rated by virtue of Group 8 of Schedule 5 to this Act (if it would not otherwise be such a supply).

(4) Sub-paragraph (5) below applies where--

(a) one or more relevant zero-rated supplies relating to a building (or part of a building) have been made to any person; and

(b) within the period of ten years beginning with the day on which the building is completed, the person uses the building or any part of it (or the building or any part of it including, consisting of or forming part of the part to which the relevant zero-rated supply or supplies related) for a purpose which is neither a relevant residential purpose nor a relevant charitable purpose.

(5) Where this sub-paragraph applies, his interest in, right over or licence to occupy so much of the building as--

(a) by reason of its intended use gave rise to the relevant zero-rated supply or supplies; and

(b) is used otherwise than for a relevant residential purpose or a relevant charitable purpose,

shall be treated for the purposes of this Act as supplied to him for the purpose of a business carried on by him and supplied by him in the course or furtherance of the business when he first uses it for a purpose which is neither a relevant residential purpose nor a relevant charitable purpose.

(6) Where sub-paragraph (5) above applies--

(a) the supply shall be taken to be a taxable supply which is not zero-rated by virtue of Group 8 of Schedule 5 to this Act (if it would not otherwise be such a supply); and

(b) the value of the supply shall be such that the amount of tax chargeable on it is equal to the amount of the tax which would have been chargeable on the relevant zero-rated supply (or, where there was more than one such supply, the aggregate amount which would have been chargeable on them) had so much of the building as is mentioned in sub-paragraph (5) above not been intended for use solely for a relevant residential purpose or a relevant charitable purpose.



Election to waive exemption

2 (1) Subject to sub-paragraphs (2) and (3) and paragraph 3 below, where an election under this paragraph has effect in relation to any land, if and to the extent that any grant made in relation to it at a time when the election has effect by the person who made the election, or where that person is a body corporate by that person or a relevant associate, would (apart from this sub-paragraph) fall within Group 1 of Schedule 6 to this Act, the grant shall not fall within that Group.

(2) Sub-paragraph (1) above shall not apply in relation to a grant if the grant is made in relation to--

(a) a building or part of a building intended for use as a dwelling or number of dwellings or solely for a relevant residential purpose; or

(b) a building or part of a building intended for use solely for a relevant charitable purpose, other than as an office.

(3) Sub-paragraph (1) above shall not apply in relation to a grant if--

(a) the grant is made to a registered housing association and the association has given to the grantor a certificate stating that the land is to be used (after any necessary demolition work) for the construction of a building or buildings intended for use as a dwelling or number of dwellings or solely for a relevant residential purpose; or

(b) the grant is made to an individual and the land is to be used for the construction, otherwise than in the course or furtherance of a business carried on by him, of a building intended for use by him as a dwelling.

(4) Subject to the following provisions of this paragraph, no input tax on any supply or importation which, apart from this sub-paragraph, would be allowable by virtue of the operation of this paragraph shall be allowed if the supply or importation took place before the first day for which the election in question has effect.

(5) Subject to sub-paragraph (6) below, sub-paragraph (4) above shall not apply where the person by whom the election was made--

(a) has not, before the first day for which the election has effect, made in relation to the land in relation to which the election has effect any grant falling within Group 1 of Schedule 6 to this Act; or

(b) has before that day made in relation to that land a grant or grants so falling but the grant, or all the grants,--

(i) were made in the period beginning with 1st April 1989 and ending with 31st July 1989; and

(ii) would have been taxable supplies but for the amendments made by Schedule 3 to the Finance Act 1989.

(6) Sub-paragraph (5) above does not make allowable any input tax on supplies or importations taking place before 1st August 1989 unless--

(a) it is attributable by or under regulations to grants made by the person on or after 1st April 1989 which would have been taxable supplies but for the amendments made by Schedule 3 to the Finance Act 1989; and

(b) the election has effect from 1st August 1989.

(7) Sub-paragraph (4) above shall not apply in relation to input tax on grants or other supplies which are made in the period beginning with 1st April 1989 and ending with 31st July 1989 if--

(a) they would have been zero-rated by virtue of item 1 or 2 of Group 8 of Schedule 5 to this Act or exempt by virtue of item 1 of Group 1 of Schedule 6 to this Act but for the amendments made by Schedule 3 to the Finance Act 1989; and

(b) the election has effect from 1st August 1989.

3 (1) An election under paragraph 2 above shall have effect--

(a) from the beginning of the day on which the election is made or of any later day specified in the election; or

(b) where the election is made before 1st November 1989, from the beginning of 1st August 1989 or of any later day so specified.

(2) An election under paragraph 2 above shall have effect in relation to any land specified, or of a description specified, in the election.

(3) Where such an election is made in relation to, or to part of, a building (or planned building), it shall have effect in relation to the whole of the building and all the land within its curtilage; and for the purposes of this sub-paragraph buildings linked internally or by a covered walkway, and parades, precincts and complexes divided into separate units, shall be taken to be a single building (if they otherwise would not be).

(4) Where such an election is made in relation to agricultural land (including a building on agricultural land), it shall have effect in relation to any other agricultural land if that other land is not separated from it by--

(a) land which is not agricultural land; or

(b) agricultural land in separate ownership.

(5) For the purposes of sub-paragraph (4) above--

(a) land shall be taken not to be separated from other land if it is separated from it only by a road, railway, river or something similar; and

(b) land is in separate ownership from land in relation to which an election is made if the person by whom the election is made has no interest in, right over or licence to occupy it and, where that person is a body corporate, no relevant associate has any such interest, right or licence.

(6) An election under paragraph 2 above shall be irrevocable and, except where it is an election of a description specified in a notice published by the Commissioners, shall not have effect unless written notification of it is given to the Commissioners together with such information as the Commissioners may require.

(7) Except where the Commissioners otherwise allow, a notification required under sub-paragraph (6) above shall be given not later than the end of the period of thirty days beginning with the day on which the election is made.

(8) In paragraph 2 above and this paragraph "relevant associate", in relation to a body corporate by which an election under paragraph 2 above has been made in relation to any building or land, means a body corporate which under section 29 of this Act--

(a) was treated as a member of the same group as the body corporate by which the election was made at the time when the election first had effect;

(b) has been so treated at any later time when the body corporate by which the election was made had an interest in, right over or licence to occupy the building or land (or any part of it); or

(c) has been treated as a member of the same group as a body corporate within paragraph (a) or (b) above or this paragraph at a time when that body corporate had an interest in, right over or licence to occupy the building or land (or any part of it).

(9) In paragraph 2 above "registered housing association" means a registered housing association within the meaning of the [1985 c. 69.] Housing Associations Act 1985 or Part VII of the [S.I. 1981/156 (N.I.3).] Housing (Northern Ireland) Order 1981.

4 (1) This paragraph has effect where rent is payable in consideration of the grant of an interest in, right over, or licence to occupy any building or land to which an election under paragraph 2 above relates (or any part of any such building or land).

(2) If--

(a) the rent relates to a period beginning before and ending on or after the first day for which the election has effect; and

(b) the grant for which the rent is consideration would, apart from this sub-paragraph, take place before that day,

the grant shall be treated as taking place on that day to the extent that it is made for rent relating to the part of the period falling on or after that day.

(3) If--

(a) the rent relates to a period beginning on or after the first day for which the election has effect; and

(b) the grant for which the rent is consideration would, apart from this sub-paragraph, take place before that day,

the grant shall be treated as taking place on the first day of the period to which the rent relates.

(4) If--

(a) the rent relates to a period beginning before the first day for which the election has effect; and

(b) the grant for which the rent is consideration takes place on or after that day,

tax shall not be chargeable on the grant by virtue of paragraph 2 above to the extent that it is made for rent relating to any time before that day.

(5) Where the rent is payable by a person in relation to a period when he is in occupation of a building completed before 1st August 1989 (or part of such a building) or land of which he was in occupation immediately before that date, any tax which would be chargeable by virtue of paragraph 2 above on the grant for which the rent is consideration--

(a) except in the case of a charity, shall be chargeable as if the consideration were reduced by 50 per cent. if and to the extent that the rent relates to or to any part of the year beginning on 1st August 1989 and ending on 31st July 1990; and

(b) in the case of a charity--

(i) shall be chargeable as if the consideration were reduced by 80 per cent. if and to the extent that the rent relates to or to any part of the year beginning on 1st August 1989 and ending on 31st July 1990;

(ii) shall be chargeable as if the consideration were reduced by 60 per cent. if and to the extent that the rent relates to or to any part of the year beginning on 1st August 1990 and ending on 31st July 1991;

(iii) shall be chargeable as if the consideration were reduced by 40 per cent. if and to the extent that the rent relates to or to any part of the year beginning on 1st August 1991 and ending on 31st July 1992; and

(iv) shall be chargeable as if the consideration were reduced by 20 per cent. if and to the extent that the rent relates to or to any part of the year beginning on 1st August 1992 and ending on 31st July 1993.

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