The legal provisions that cover VAT zero-rating of vehicles supplied under the scheme are contained in section 30(8) of the VAT Act 1994 and Regulations 132 and 133 of the VAT Regulations 1995.
Section 30(8) permits the zero-rating of goods removed from the
UK and supplied to a customer for export to a destination outside
the EC. It also provides the authority for further regulations and
Regulations may provide for the zero-rating of supplies of goods, or of such goods as may bespecified in the regulations, in cases where-
(a) the Commissioners are satisfied that the goods have been or are to be exported to a placeoutside the member States or that the supply in question involves both-
(i) the removal of the goods from the United Kingdom; and
(ii) their acquisition in another member State by a person who is liable for VAT on theacquisition in accordance with provisions of the law of that member State corresponding, inrelation to that member State, to the provisions of section 10; and
(b) such other conditions, if any, as may be
specified in the regulations or the Commissionersmay impose are fulfilled.
Section 30(10) provides the legal basis for enforcement action in the event of non-exportation of goods supplied tax free for export:
Where the supply of any goods has been zero-rated by virtue of subsection (6) above or inpursuance of regulations made under subsection (8) or (9) above and -
(a) the goods are found in the United Kingdom after the date on which they were alleged tohave been or were to be exported or shipped or otherwise removed from the United Kingdom;or
(b) any condition specified in the regulations under subsection (6), (8) or (9) above orimposed by the Commissioners is not complied with,
and the presence of the goods in the United Kingdom after that date or the non-observance ofthe condition has not been authorised for the purposes of this subsection by theCommissioners, the goods shall be liable to forfeiture under the Management Act and the VATthat would have been chargeable on the supply but for the zero-rating shall become payableforthwith by the person to whom the goods were supplied or by any person in whosepossession the goods are found in the United Kingdom; but the Commissioners may, if theythink fit, waive payment of the whole or part of that VAT.
Regulation 132 permits the tax-free supply of a vehicle to an
overseas visitor with 12 months use before the due date for export:
The Commissioners may, on application by an overseas visitor who intends to depart from themember States within 15 months and remain outside the member States for a period of atleast 6 months, permit him within 12 months of his intended departure to purchase, from aregistered person, a motor vehicle without payment of VAT for subsequent export, and itssupply, subject to such conditions as they may impose, shall be zero-rated.
Regulation 133 permits the tax-free supply of a vehicle to an EC resident with 6 months use before the due date for export:
The Commissioners may, on application by any person who intends to depart from themember States within 9 months and remain outside the member States for a period of at least6 months, permit him within 6 months of his intended departure to purchase, from aregistered person, a motor vehicle without payment of VAT, for subsequent export, and itssupply, subject to such conditions as they may impose, shall be zero-rated.
The regulations empower the Commissioners to set conditions which have force of law. The conditions are set out in: