HM Revenue and Customs Brief 41/11
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Issued: 19 December 2001
VAT: motor vehicles adapted after initial supply to disabled
people - important change from 1 January 2012
Who needs to read this?
VAT registered businesses that sell motor vehicles to disabled
wheelchair users.
What is the change?
From 1 January 2012, the current concessionary arrangement
which allows a motor vehicle supplied to a disabled wheelchair user to
be treated as a zero rated supply, if the vehicle was adapted shortly
after it was supplied to the disabled person, will no longer apply.
However, VAT zero-rating will continue to apply on motor
vehicles that are adapted before the
vehicle is supplied to a disabled wheelchair user provided all the
other qualifying conditions for zero-rating are met.
The reason for this change
The UK VAT law allows a motor vehicle supplied to a disabled
wheelchair user to be zero-rated provided it has been adapted before it
is supplied to the disabled person. In addition, HM Revenue &
Customs (HMRC) has allowed, by concession motor vehicles that are
adapted shortly after they have been supplied to disabled persons to be
zero-rated.
HMRC does not have the discretion to allow this concessionary
treatment, and it is not possible to put the concession on a statutory
basis as this would contravene EU law. There is no legal basis in EU
law which would permit this concession to be introduced in UK
legislation.
The Government announced in December 2010 that the concession
would be withdrawn on 1 January 2012, to allow businesses a year to
prepare for the change.
The legal basis for the relief
The current UK VAT legislation, under Items 2(f), 2A and Note
5L to Group 12, Schedule 8, VAT Act 1994, allows a motor vehicle to be
zero-rated provided it has been adapted before it is supplied to a
disabled wheelchair user for their personal use or to a charity that
makes it available to such persons. The relevant legislation excludes
the zero-rating of motor vehicles that are adapted after the supply has
been made. This treatment goes beyond the scope of the statutory relief.
Further advice
If you have any questions about this change, please contact
VAT Disabled Reliefs Helpline on Tel 0845 302 0203.
About the Author
© Crown Copyright 2011.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
