VAT registered businesses that sell motor vehicles to disabled wheelchair users.
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 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The Government announced in December 2010 that the concession would be withdrawn on 1 January 2012, to allow businesses a year to prepare for the change.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 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.
If you have any questions about this change, please contact VAT Disabled Reliefs Helpline on Tel 0845 302 0203.
Issued: 19 December 2001.
