On 19 December 2019, the Value Added Tax (Place of Supply of Goods) Amendment Order 2019 (SI 2019/1507) (the Amendment Order) and the Value Added Tax (Amendment) (No 2) Regulations 2019 (SI 2019/1509) (the Amendment Regulations) were made, introducing changes to UK law required by Council Directive (EU) 2018/1910 (the Directive).
The Directive made certain “quick fix” amendments to Council Directive 2006/122/EC (the Principal VAT Directive) to improve the functioning of VAT in EU cross-border transactions.
The Directive makes provision for chain transactions (which occur where a number of businesses successively buy and sell the same goods but the goods themselves are transported directly from the original supplier and delivered to the final purchaser).
The Amendment Order amends the Value Added Tax (Place of Supply of Goods) Order 2004 (SI 2004/3148), as required by the Directive, identifying the transaction in the chain that is to be treated as the intra-community supply and, therefore, zero-rated, and specifying how the place of supply of goods provisions in section 7(2), VATA 1994, are to apply to supplies of the goods after that supply.
The Amendment Regulations amend the VAT Regulations 1995 (SI 1995/2519), to reflect in legislation the conditions for the application of zero-rating to intra-community supplies.
On 20 December 2019, HMRC published guidance on the practical application of the changes, noting that the new chain transaction rules will achieve the same end result as the UK’s current policy.
HMRC’s guidance can be viewed here.