The Value Added Tax (Disclosure of Avoidance Schemes) (Designations) Order 2004

• Citation: S.I. 2004/1933
• Sections: 10

Section 1 Citation and commencement

This Order may be cited as the Value Added Tax (Disclosure of Avoidance Schemes) (Designations) Order 2004 and comes into force on 1st August 2004.

Section 2 Interpretation

(1) In this Order “ the Act ” means the Value Added Tax Act 1994.

(2) Any reference in this Order to “Schedule 8” or “Schedule 9” is a reference to that Schedule to the Act.

(3) For the purposes of this Order a person is connected with another where—

(a) one of them is an undertaking in relation to which the other is a group undertaking; or

(b) both of them are connected to the same trust.

(4) For the purposes of this Order a person is connected to a trust where —

(a) he is the settlor of the trust, a trustee or beneficiary of it; or

(b) he holds any shares in a company in accordance with the terms of the trust, or is a person on whose behalf such shares are held.

(5) For the purposes of this Order “undertaking” and “group undertaking” have the meaning given by section 259 of the Companies Act 1985 .

(6) A scheme is treated as fitting a description contained in the first column of Schedule 1 to this Order even if any feature of that scheme is not actually present (whether as a matter of law or for any other reason), provided a taxable person has treated that feature as being present for the purpose of making—

(a) a return required under the Act; or

(b) a claim for the repayment of output tax or an increase in credit for input tax.

(7) A provision is treated as fitting a description contained in Schedule 2 to this Order even if it, or any feature of it, is not actually present (whether as a matter of law or for any other reason), provided a taxable person has treated that feature as being present for the purpose of making—

(a) a return required under the Act; or

(b) a claim for the repayment of output tax or an increase in credit for input tax.

Section 3 Designation of avoidance schemes and provisions included in or associated with avoidance schemes

(1) The schemes described in the first column of Schedule 1 to this Order are designated schemes for the purposes of paragraph 3 of Schedule 11A to the Act and are allocated the reference numbers shown in the second column of Schedule 1.

(2) The provisions described in Schedule 2 to this Order are provisions designated for the purposes of paragraph 4 of Schedule 11A to the Act.

Section 1

An agreement preventing or limiting the disclosure of how a scheme gives rise to a tax advantage.

Section 2

(1) An agreement that the tax advantage to a person accruing from the operation of the scheme be shared to any extent with another party to it or another person promoting it.

(2) A person is a promoter of a scheme if, in the course of a trade, profession or business which involves the provision to other persons of services relating to taxation—

(a) he is to any extent responsible for the design of the proposed arrangements; or

(b) he invites persons to enter into contracts for the implementation of the proposed arrangements.

Section 3

(1) An agreement that payment to a promoter of the scheme be contingent in whole or in part on the tax advantage accruing from the operation of the scheme.

(2) A person is a promoter of a scheme if, in the course of a trade, profession or business which involves the provision to other persons of services relating to taxation—

(a) he is to any extent responsible for the design of the proposed arrangements; or

(b) he invites persons to enter into contracts for the implementation of the proposed arrangements.

Section 4

(1) A payment for a supply of goods or services between connected persons—

(a) before the time applicable under section 6(2) or (3) of the Act; or

(b) where the supply is a continuous supply and the payment is before the goods or services are provided.

(2) A supply is a continuous supply if it is a supply to which regulation 85 (leases treated as supplies of goods), 86 (supplies of water, gas or any form of power, heat, refrigeration or ventilation), 90 (continuous supply of services), 91 (royalties and similar payments) or 93 (supplies in the construction industry) of the Value Added Tax Regulations 1995 applies.

(3) For the purposes of paragraph (1)(b) goods or services are provided at the time when, and to the extent that, the recipient receives the benefit of them.

Section 5

The funding in whole or in part of a supply of goods or services between connected persons by means of a loan between connected persons or the subscription for shares in, or securities issued by, a connected person.

Section 6

(1) A supply of a relevant service which is used or intended to be used, in whole or in part, directly or indirectly, in making to a person belonging in the United Kingdom, a supply which is zero-rated, exempt or treated as made in another country (and not in the United Kingdom) by virtue of section 7(10) of the Act (place of supply of services).

(2) A “relevant service” is a service of a description falling within—

(a) article 3(a) of the Value Added Tax (Input Tax) (Specified Supplies) Order 1999 (services supplied to a person who belongs outside the member States);

(b) article 3(b) of that Order (services directly linked to the export of goods to a place outside the member States), insofar as they are supplies of a description falling within item 2 of Group 5 of Schedule 9 (the making of any advance or any credit); or

(c) article 3(c) of that Order (the provision of intermediary insurance or financial services);

or is a supply of a description specified in any of paragraphs 1 to 8 of Schedule 5 to the Act (services supplied where received), and the recipient of that supply belongs in a country, other than the Isle of Man, which is not a member State.

Section 7

(1) A relevant grant where—

(a) the grantor or grantee of the interest or right is a person who is not entitled to credit for all the input tax wholly attributable to the supplies he makes;

(b) any work of construction, alteration, demolition, repair, maintenance or civil engineering has been or is to be carried out on the land; and

(c) the grant is made to a person connected with the grantor.

(2) “Relevant grant” means the grant of any interest in or right over land or of any licence to occupy land or, in relation to land in Scotland, any personal right to call for or be granted any such interest or right, other than a grant of a description falling within item 1 of Group 5 (first grant of a major interest by a person constructing a building designed for dwelling, or intended for use solely for residential or charitable purposes; or by a person converting a non-residential building to residential use) or item 1 of Group 6 (first grant of a major interest in a protected building by a person reconstructing it) of Schedule 8.

(3) “Grant” includes an assignment or surrender and the supply made by the person to whom an interest is surrendered when there is a reverse surrender.