FINANCE ACT 2011 VALUE-ADDED TAX NOTES FOR GUIDANCE

Transcription

1 FINANCE ACT 2011 VALUE-ADDED TAX NOTES FOR GUIDANCE Issued by VAT Policy and Legislation Branch, February 2011

2 55. Interpretation (Part 3) This section defines the Principal Act as the Value-Added Tax Consolidation Act, 2010 for the purposes of Part 3 of the Act. This is a conventional provision in Finance Acts. It allows abbreviated terms to be used for references to previous legislation and thus facilitates drafting and subsequent reading of the legislation. For example, the term Principal Act used in Part 3 of this Act refers to the Value- Added Tax Consolidation Act Amendment of section 17 of the VAT Consolidation Act (other provisions in relation to services) This section amends section 17 of the VAT Consolidation Act, which deals with rules relating to persons who may be deemed to be accountable in respect supplies of services. Section 17(1) required that a premises provider, who allowed a non-established mobile trader to supply goods on his or her land for a period of less than 7 consecutive days, notify Revenue 14 days in advance of the trader supplying those goods. The stipulation in relation to 7 days was considered too restrictive. The amendment changes the period from 7 days to 28 days and ensures that Revenue will now be notified in advance of longer events, such as Christmas fairs, trade fairs etc. This section has effect from the date of passing of the Finance Act (6 February 2011). 57. Amendment of section 95 of the VAT Consolidation Act (transitional measures for supplies of immovable goods) This section amends section 95 of the VAT Consolidation Act, which deals with transitional measures for supplies of immovable goods. The amendment provides for a deductibility adjustment, which is to be no greater than the amount of VAT due on the sale, for housing and burial plots sold by public bodies on or after 1 July 2010, which were acquired by them before that date and where there is otherwise no entitlement to VAT input credit. Paragraph (a) makes a technical amendment to subsection (1). Paragraph (b) inserts a new paragraph (c) into subsection (1) and defines the immovable goods to which the new provision relates, namely, completed immovable

3 goods being residential property or burial grounds acquired or developed by a public body prior to 1 July 2010, but sold on or after that date. Paragraph (c) inserts a new subsection (6A) and provides for deductibility for public bodies in relation to the above-mentioned immovable goods, but ensures that the deductibility adjustment will be no greater than the amount of VAT due on the sale. This section has effect from the date of passing of the Finance Act (6 February 2011). 58. Amendment of section 115 of the VAT Consolidation Act (penalties generally) This section amends section 115 of the VAT Consolidation Act, which deals with penalties generally. The amendment provides for an extension of the civil penalties regime in the event of non-compliance with particular VAT requirements, primarily relating to record keeping, the provision of documents to other persons and notification to the Revenue Commissioners. A penalty of 4,000 will apply for failure to adhere to these requirements. Paragraph (a) amends subsection (1) and provides for penalties in the following circumstances: Recapitulative statement i.e. a statement in respect of intra-community supplies of services A penalty of 4,000 will apply for failure to provide a recapitulative statement in accordance with section 83 in respect of intra-community supplies of services. A similar penalty already applies for failure to provide a recapitulative statement in respect of intra-community supplies of goods in accordance with section 82. Capital Goods Scheme A penalty of 4,000 will apply for failure to create a capital goods record and failure to provide a transferee with a copy of that record. Transitional measures for supplies of immovable goods In the event of an assignment or surrender of a legacy lease, a document must be provided to the assignee detailing the amount of tax payable and the number of intervals remaining in the Capital Goods Scheme. A penalty of 4,000 will apply for failure to provide such a document. Zero-rated scheme for export businesses Paragraph (b) inserts a new subsection (7A) which extends the penalty provisions to provide that (1) a penalty of 4,000 will apply for the taxable period where a business, which had qualified under the zero-rating scheme for export businesses, fails to notify the Revenue Commissioners that it no longer qualifies, and (2) a further penalty of 4,000 will apply for each subsequent taxable period in which the business does not so qualify and has failed to notify the Revenue Commissioners accordingly. This section has effect from the date of passing of the Finance Act (6 February 2011).

4 59. Supplies of scrap metal reverse charge This section amends sections 16, 59, 66 and 87 of the VAT Consolidation Act It extends the reverse charge mechanism to the scrap metal sector. The amendments provide for the application of a reverse charge to taxable persons carrying on a business in the State, who deal in scrap metal and who receive supplies of scrap metal from other taxable persons. Subsection (1)(a) amends section 16 by inserting a new subsection (4). In addition to setting out the scope of this amendment by including various definitions, e.g. scrap metal, this subsection provides for the introduction of the reverse charge mechanism, making the recipient of the goods the accountable person for the VAT due in relation to the supply of the goods. Subsection (1)(b) amends section 59(2) by inserting a new paragraph (ia). This provides that the tax which the recipient of the scrap metal is accountable for, under the new provision in section 16, is deductible for VAT purposes as if the tax had been charged to that recipient, but only where the recipient is otherwise entitled to deductibility. Subsection (1)(c) amends section 66 by inserting new subsection (4A). This provides that the supplier of the scrap metal, who is subject to the new reverse charge rule, must provide a document to the recipient indicating that the recipient is liable to account for the VAT, unless the recipient and the person who supplied the scrap metal agree that the document can be drawn up by the recipient. Subsection (1)(d) amends section 87(1) by clarifying that scrap metal, which is subject to the reverse charge, cannot be included in the Margin Scheme for taxable dealers. That scheme deals with the taxation of second-hand goods. Subsection (2) provides that these provisions come into effect on 1 May This section has effect from 1 May Amendment of Schedule 1 to the VAT Consolidation Act This section makes three amendments to Schedule 1 to the VAT Consolidation Act, which relates to exempt activities. Subsection (1)(a) replaces paragraph (1) of the Schedule, which deals with public postal services. The public postal services are provided as all or part of a universal service as set out in the EU Postal Directives, and this paragraph extends the VAT exemption to both An Post and to any other designated provider of that service. This amendment applies from 1 January 2011.

5 Subsection (1)(b) replaces paragraph 3(5) of the Schedule to clarify that admission to cultural services, e.g. museums, provided by public bodies, remain exempt from VAT. The measure applies from 1 July 2010 when, following the ECJ judgement against Ireland in C-554/07, certain services provided by public bodies, including local authorities, became subject to VAT. Subsection (1)(c) replaces paragraph 10(1) of the Schedule relating to the VAT exemption for certain types of gambling by inserting a new subparagraph (1A). This new provision includes within the current VAT exemption bets and commissions that are being made subject to excise duty by a separate provision of the Act. The bets and commissions in question are bets entered into remotely by bookmakers with persons in the State and the commissions of betting exchanges earned from bets entered into on the exchange by persons in the State. This amendment is subject to a Ministerial Order. Subsection (1)(a) has effect from 1 January Subsection (1)(b) has effect from 1 July Subsection (1)(c) is subject to a Order to be made by the Minister for Finance. 61. Post-Consolidation Provisions This section and Schedule 2 to this Finance Act provide for a series of miscellaneous amendments to the Value-Added Tax Consolidation Act 2010, which were identified during the consolidation process. Minor changes, cross-references, ambiguities, inconsistencies, etc, identified during the consolidation process are amended in Schedule 2 to the Finance Act as follows: Paragraph 1 defines the Principal Act. Paragraph 2 makes minor amendments to the definition of stock-in-trade in section 2(1). Paragraph 3 rewrites section 8(1) to clarify the method of calculating the amount of VAT to be clawed back in the event of the cancellation of an election to be an accountable person. This is achieved through the use of a formula. Paragraph 4 amends section 15(2)(c) to include a necessary cross-reference to section 83. Paragraph 5 amends section 19(1)(a) to correct an incorrect cross-reference. Paragraphs 6 and 7 remove incorrect references. Paragraph 8 clarifies section 34(n). Paragraph 9 amends section 49(2) to correct a cross-reference. Paragraph 10 amends section 56(1), in the definition of qualifying person, to change an incorrect reference to the State to a Member State other than the State. Paragraph 11 rewrites paragraph (b) of section 63(1) which clarifies the definition of capital goods owner.

6 Paragraph 12 removes unnecessary wording from section 74(2). Paragraph 13 amends section 88(5) to correct a cross-reference. Paragraph 14 makes a minor technical amendment to section 101(14). Paragraph 15 amends section 116(12) to include a necessary cross-reference. Paragraph 16 amends section 119(4) to include a necessary cross-reference to section 81. Paragraph 17 amends section 120(17) by deleting paragraph (c). Paragraph 18 makes a minor technical amendment to paragraph 6 of Schedule 1. Paragraph 19 makes a minor technical amendment to paragraph 21(3) of Schedule 3. This section has effect from the date of passing of the Finance Act (6 February 2011).