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7 2001

FINANCE ACT, 2001

PART 4

Value-Added Tax

Interpretation (Part 4).

181. —In this Part—

“Principal Act” means the Value-Added Tax Act, 1972 ;

“Act of 1978” means the Value-Added Tax (Amendment) Act, 1978 ;

“Act of 1995” means the Finance Act, 1995 ;

“Act of 1999” means the Finance Act, 1999 ;

“Act of 2000” means the Finance Act, 2000 .

Amendment of section 3 (supply of goods) of Principal Act.

182. —Section 3 of the Principal Act is amended in subsection (5)—

(a) in subparagraph (iii) of paragraph (b) by the insertion after “person” of “even if that business or that part thereof had ceased trading”, and

(b) by the insertion of the following after paragraph (c) (inserted by the Act of 1999):

“(d) The disposal of goods by an insurer who has taken possession of them from the owner of those goods, in this subsection referred to as the “insured”, in connection with the settlement of a claim under a policy of insurance, being goods—

(a) in relation to the acquisition of which the insured had borne tax, and

(b) which are of such a kind or were used in such circumstances that no part of the tax borne was deductible by the insured,

shall be deemed for the purposes of this Act not to be a supply of goods.”.

Amendment of section 5 (supply of services) of Principal Act.

183. —Section 5 of the Principal Act is amended—

(a) in subsection (6)(e) by the insertion of the following after subparagraph (iii) (inserted by the Finance Act, 1986 ):

“(iiia) in case they are received, otherwise than for a business purpose, by a person in the State (referred to in this subparagraph as the ‘recipient’) and are supplied by a person who has his establishment in another Member State of the Community, in circumstances in which value-added tax referred to in Council Directive No. 77/388/EEC of 17 May 1977 is not payable in that Member State because the recipient held himself out or allowed himself to be held out as a taxable person within the meaning of Article 4 of that Directive in respect of such supplies, the State,”,

and

(b) by the substitution of the following for subsection (8) (inserted by the Act of 1978):

“(8) (a) The transfer of goodwill or other intangible assets of a business, in connection with the transfer of the business or part thereof, even if that business or that part thereof had ceased trading, by—

(i) a taxable person to another taxable person or a flat-rate farmer, or

(ii) a person who is not a taxable person to another person,

shall be deemed, for the purposes of this Act, not to be a supply of services.

(b) For the purposes of this subsection, ‘taxable person’ shall not include a person who is a taxable person solely by virtue of subsections (1A) and (2) of section 8.”.

Amendment of section 8 (taxable persons) of Principal Act.

184. —Section 8(2) of the Principal Act is amended in paragraph (a) (inserted by the Finance Act, 1993 ) by the insertion of “, (iiia)” after “(iii)”.

Amendment of section 10A (margin scheme goods) of Principal Act.

185. —Section 10A (inserted by the Act of 1995) of the Principal Act is amended in the definition of “margin scheme goods” (inserted by the Act of 1999) by the substitution of “paragraphs (c) and (d) of subsection (5) of section 3” for “section 3(5)(c)”.

Amendment of section 10B (special scheme for auctioneers) of Principal Act.

186. —Section 10B (inserted by the Act of 1995) of the Principal Act is amended by the insertion of the following after paragraph (aa) (inserted by the Act of 1999):

“(aaa) an insurer within the meaning of section 3(5)(d) (inserted by this Act) who took possession of those goods in connection with the settlement of a claim under a policy of insurance and whose disposal of the goods is deemed not to be a supply of the goods in accordance with section 3(5)(d) (inserted by this Act)”.

Amendment of section 11 (rates of tax) of Principal Act.

187. —Section 11 of the Principal Act is amended in subsection (1) (inserted by the Finance Act, 1992 )—

(a) by the substitution in paragraph (a) of “20 per cent” for “21 per cent”, and

(b) by the substitution in paragraph (f) of “4.3 per cent” for “4.2 per cent” (inserted by the Act of 2000).

Amendment of section 12 (deduction for tax borne or paid) of Principal Act.

188. —Section 12 of the Principal Act is amended—

(a) by the insertion in paragraph (a) of subsection (1) after “deduct”, of “, subject to making any adjustment required in accordance with section 12D,”,

(b) by the insertion in paragraph (b) (inserted by the Finance Act, 1987 ) of subsection (1) of the following after paragraph (ia):

“(ib) the operation, in accordance with Commission Regulation (EC) No. 2777/2000 of 18 December 2000, of the Cattle Testing or Purchase for Destruction Scheme, by a body who is a taxable person by virtue of the Value-Added Tax (Agricultural Intervention Agency) Order, 2001 (S.I. No. 11 of 2001).”,

and

(c) by the substitution in paragraph (f) of subsection (4) (inserted by the Act of 2000) of “shall” for “may”.

Amendment of section 12A (special provisions for tax invoiced by flat-rate farmers) of Principal Act.

189. —Section 12A (inserted by the Act of 1978) of the Principal Act is amended in subsection (1) by the substitution of “4.3 per cent” for “4.2 per cent” (inserted by the Act of 2000).

Amendment of section 12B (special scheme for means of transport supplied by taxable dealers) of Principal Act.

190. —Section 12B (inserted by the Act of 1995) of the Principal Act is amended in subsection (2)(aa) by the substitution of “paragraphs (c) and (d) of subsection (5) of section 3” for “section 3(5)(c)”.

Adjustment of tax deductible in certain circumstances.

191. —The Principal Act is amended by the insertion of the following after section 12C—

“12D.—(1) For the purposes of this section—

‘full year’ shall be any continuous period of twelve months;

‘interest’ in relation to immovable goods has the meaning assigned to it by section 4.

(2) Where—

(a) a person makes a transfer of an interest in immovable goods in accordance with section 3(5)(b)(iii), and

(b) but for the application of that section, tax would have been chargeable on the transfer, and the person (referred to in this section as a ‘transferor’) was entitled to deduct part of the tax charged on the most recent purchase or acquisition of an interest in, or the development of, the immovable goods subject to that transfer,

that transferor shall, for the purposes of section 12, be entitled to increase the amount of tax deductible for the taxable period within which the transfer is made by an amount calculated in accordance with the following formula:

(T - TD) × (Y - N)

Y

where—

T is the tax chargeable on that most recent purchase or acquisition of an interest in, or that development of, the immovable goods,

TD is the tax that the transferor was entitled to deduct on that most recent purchase or acquisition of an interest in, or that development of, the immovable goods,

Y is 20 or, if the interest when it was created in the immovable goods being transferred was for a period of less than 20 years, the number of full years in that interest, and

N is the number of full years since the interest was created or, if the goods were developed since that interest was created, the number of full years since the most recent development:

but if that N is greater than that Y, such an amount calculated shall be deemed to be nil.

(3) Where a transferor acquired an interest in immovable goods as a result of a transfer in accordance with section 3(5)(b)(iii) and the transferor did not develop those immovable goods since the acquisition then, for the purposes of subsection (2), the amount by which that transferor shall be entitled to increase the amount of tax deductible, in accordance with section 12, for the taxable period in which the transferor transfers those goods, shall be calculated in accordance with the following formula:

A × (Y - N)

Y

where—

A is the amount which the transferor was required to calculate and reduce his or her deductible amount by, in accordance with subsection (4), when the transferor acquired the interest in those goods,

Y is 20 or, if the interest when it was created in the immovable goods being transferred was for a period of less than 20 years, the number of full years in that interest, and

N is the number of full years since the interest was created or, if the goods were developed since that interest was created, the number of full years since the most recent development:

but if that N is greater than that Y, such an amount calculated shall be deemed to be nil.

(4) Where a person receives an interest in immovable goods as a result of a transfer and the person would not have been entitled to deduct all the tax that would have been chargeable on the transfer but for the application of section 3(5)(b)(iii), that person shall reduce the amount of tax deductible by that person, for the purposes of section 12, for the period within which the transfer was made, by an amount calculated in accordance with the following formula:

(T1 - TD1) × (Y - N)

Y

where—

T1 is the amount of tax that would have been chargeable on the transfer if section 3(5)(b)(iii) did not apply,

TD1 is the amount of tax that would have been deductible by the transferee if section 3(5)(b)(iii) had not applied to the transfer,

Y is 20 or, if the interest when it was created in the immovable goods being transferred was for a period of less than 20 years, the number of full years in that interest, and

N is the number of full years since the interest was created or, if the goods were developed since that interest was created, the number of full years since the most recent development:

but if that N is greater than that Y, such an amount calculated shall be deemed to be nil.”.

Amendment of section 13A (supplies to, and intra-Community acquisitions and imports by, certain taxable persons) of Principal Act.

192. —Section 13A of the Principal Act (inserted by the Finance Act, 1993 ) is amended in subsection (1) by the substitution in the definition of “qualifying person” of “subparagraphs (a)(1), (aa), or (b)” for “subparagraph (a)(1) or (b)”.

Amendment of section 17 (invoices) of Principal Act.

193. —Section 17 of the Principal Act is amended—

(a) by the substitution of the following for subsection (1A) (inserted by the Finance Act, 1986 ):

“(1A) (a) An invoice or other document required to be issued by a person under this section shall, subject to paragraph (b), be deemed to be so issued by that person if the particulars which are required by regulations to be contained in such invoice or other document are recorded, retained and transmitted electronically by a system or systems which ensures the integrity of those particulars and the authenticity of their origin, without the issue of any invoice are other document containing those particulars.

(b) An invoice of other document required to be issued under this section shall not be deemed by paragraph (a) to be so issued unless the person, who is required to issue such invoice or other document, complies with such conditions as are specified by regulations and the system or systems used by that person conforms with such specifications as are required by regulations.

(c) The person who receives a transmission referred to in paragraph (a) shall not be deemed to be issued with an invoice or other document required to be issued under this section unless the particulars which are required by regulations to be contained in such invoice or other document are received electronically in a system which ensures the integrity of those particulars and the authenticity of their origin and unless the system conforms with such specifications as are required by regulations and that person complies with such conditions as are specified by regulations.”,

(b) by the insertion of the following after subsection (1AA) (inserted by the Finance Act, 1996 ):

“(1AAA) Where a person, referred to in this subsection as the ‘owner’, supplies financial services of the kind specified in subparagraph (i)(e) of the First Schedule in respect of goods which are supplied within the meaning of section (3)(1)(b), being goods which are handed over from a person in another Member State to a taxable person acting as such in the State, referred to in this subsection as the ‘acquirer’, then the owner shall issue a document to the acquirer and shall indicate thereon—

(a) that the acquirer is liable to account for the tax, if any, due in respect of the intra-Community acquisition of those goods, and

(b) such other particulars as are specified by regulations in respect of an invoice issued in accordance with subsection (1).”,

and

(c) by the substitution of “subsections (1AA), (1AAA)” for “subsection (1AA)” in subsection (1AB).

Amendment of section 19 (tax due and payable) of Principal Act.

194. —Section 19 of the Principal Act is amended in subsection (3)(aa) (inserted by the Finance Act, 1989 )—

(a) by the insertion in subparagraph (ii)(II) after “remit to the Collector-General any amount of tax payable by him in respect of such taxable periods,” of “and, in the case of an authorised person referred to in subparagraph (iv)(III) that amount shall be the balance of tax remaining to be paid, if any, after deducting from it, the amount of tax paid by him by direct debit in respect of his accounting period,”, and

(b) in subparagraph (iv) by the insertion after clause (II) of the following:

“(III) without prejudice to the generality of the foregoing, require an authorised person to agree with the Collector-General a schedule of amounts of money which he undertakes to pay on dates specified by the Collector-General by monthly direct debit from his account with a financial institution and the total of the amounts specified in that schedule shall be that person's best estimate of his total tax liability for his accounting period and he shall review on an on-going basis whether the total of the amounts specified in that schedule is likely to be adequate to cover his actual liability for his accounting period and where this is not the case or is not likely to be the case, he shall agree a revised schedule of amounts with the Collector-General and adjust his monthly direct debit amounts accordingly.”.

Amendment of section 21 (interest) of Principal Act.

195. —Section 21 of the Principal Act is amended by the insertion of the following after subsection (1):

“(1A) Where the amount of the balance of tax remaining to be paid in accordance with section 19(3)(aa)(ii)(II) by an authorised person referred to in section 19(3)(aa)(iv)(III) (in this subsection referred to as the ‘balance’) represents more than 20 per cent of the tax which the authorised person became accountable for in respect of his accounting period, then, for the purposes of this subsection, that balance shall be deemed to be payable on a day (in this subsection referred to as the ‘accrual day’) which is 6 months prior to the final day for the furnishing of a return in accordance with section 19(3)(aa)(ii)(II) and simple interest in accordance with this section shall apply from that accrual day, however, where an authorised person can demonstrate to the satisfaction of the Collector-General that the amount of interest payable on the balance, in accordance with this subsection, is greater than the sum of the amounts of interest which would have been payable in accordance with this section if—

(a) the authorised person was not so authorised,

(b) the person had submitted a return in accordance with section 19(3)(a) for each taxable period comprising the accounting period, and

(c) the amounts which were paid by direct debit during a taxable period are deemed to have been paid on the due date for submission of that return for that taxable period,

then that sum of the amounts of interest is payable.”.

Amendment of section 22 (estimation of tax due for a taxable period) of Principal Act.

196. —Section 22 of the Principal Act is amended by the substitution in paragraph (a) of subsection (2) of “fourteen” for “twenty-one”.

Amendment of section 27 (fraudulent returns, etc.) of Principal Act.

197. —Section 27 of the Principal Act is amended—

(a) by the insertion of the following after subsection (4):

“(4A) If a person acquires goods without payment of value-added tax (as referred to in Council Directive No. 77/388/EEC of 17 May 1977) in another Member State as a result of the declaration of an incorrect registration number, that person shall be liable to a penalty of £500 and, in addition, that person shall be liable to pay to the Revenue Commissioners an amount equal to the amount of tax which would have been chargeable on an intra-Community acquisition of those goods if that declaration had been the declaration of a correct registration number.”,

and

(b) in subsection (9A)(4) (inserted by the Finance Act, 1994 )—

(i) by the substitution of “For the purposes of this section” for “For the purposes of subparagraph (b) of paragraph (1)”,

and

(ii) by the insertion of the following after subparagraph (b):

“(bb) the declaration by a person of a registration number which is cancelled,”.

Repeal of section 37 (substitution of agent, etc., for person not resident in State) of Principal Act.

198. —Section 37 of the Principal Act is repealed.

Amendment of First Schedule to Principal Act.

199. —The First Schedule to the Principal Act is amended —

(a) by the insertion in paragraph (ii) after “(including the supply of goods and services incidental thereto” of “, other than the supply of research services”,

(b) by the insertion in paragraph (iv) after “letting of immovable goods” of “(which does not include the service of allowing a person use a toll road or a toll bridge)”,

(c) by the insertion in paragraph (ix)(a) after “persons”, of “and”,

(d) by the deletion in paragraph (ix) of—

(i) subparagraph (b) (inserted by the Finance Act, 1982 ),

(ii) subparagraph (c) (inserted by the Finance Act, 1987 ), and

(iii) of the words “the services of loss adjusters and excluding” (inserted by the Finance Act, 1994 ),

and

(e) by the substitution of the following for paragraph (xi):

“(xi) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents and, for the purposes of this paragraph, ‘related services’ includes the collection of insurance premiums, the sale of insurance, and claims handling and claims settlement services where the supplier of the insurance services delegates the authority to an agent and is bound by the decision of that agent in relation to that claim;”.

Amendment of Second Schedule to Principal Act.

200. —The Second Schedule to the Principal Act is amended by the insertion of the following after paragraph (va):

“(vaa) subject to and in accordance with regulations, if any, the supply, hiring, repair and maintenance of equipment incorporated or for use in sea-going vessels to which subparagraph (a) of paragraph (v) relates;”.