VAT Order reduces scope of energy-saving materials reduced rate

29 May 2019

Our regular update of tax and customs-related developments in secondary legislation, now expanded to cover relevant non-Brexit SIs too.

SIs laid in the last week

Value Added Tax (Reduced Rate) (Energy-saving Materials) Order 2019

Procedure - Made affirmative. Made date - 20 May 2019. Laid date - 21 May 2019. Coming into force date - 1 October 2019. Laying body: HM Treasury.

Purpose of the instrument - This instrument amends the scope of the reduced rate of 5% VAT for energy-saving materials to ensure that UK legislation complies with EU law. These changes have been made following a decision of the Court of Justice of the European Union as a result of an infraction by the European Commission which held that the scope of the current relief was too wide. The reduced rate of 5% will no longer apply to the installation of wind and water turbines. (More in the Explanatory Memorandum)

Select committee scrutiny

At its meeting on 22 May 2019 the Select Committee on Statutory Instruments scrutinised a number of SIs. It was agreed that the special attention of the House of Commons should be drawn to the following instrument:

S.I. 2019/881: International Tax Compliance (Amendment) Regulations 2019

The Committee draws the special attention of the House to these Regulations on the ground that they fail to comply with proper legislative practice in one respect.

These Regulations extend the application of the International Tax Compliance Regulations 2015 (which give effect to arrangements between the UK and other jurisdictions to improve international tax compliance) to arrangements entered into by the UK with other jurisdictions between 9 May 2018 and 16 May 2019. The Committee asked HMRC to explain how a user can find out which international exchange arrangements have been entered into by the UK since 9 May 2018 and why details are not given in a footnote or the Explanatory Note. In a memorandum printed as an Appendix, the Department apologises and undertakes to ensure that an appropriate reference is made in a footnote or the Explanatory Note when regulation 1(3) (b)(i) of the 2015 Regulations is next amended. The Committee accordingly reports these Regulations for failure to comply with proper legislative practice, acknowledged by the Department.

Additionally the committee considered the following relevant instruments, none of which were required to be reported:

Instruments subject to annulment

S.I. 2019/892 Value Added Tax (Section 55A) (Specified Services and Excepted Supplies) Order 2019

S.I. 2019/902 Income Tax (Qualifying Child Care) Regulations 2019

At its meeting on 22 May 2019 the Joint Committee on Statutory Instruments considered the following relevant instrument and did not require it to be reported to both Houses:

Instrument not subject to Parliamentary proceedings not laid before Parliament

S.I. 2019/914 Taxation (Cross-border Trade) Act 2018 (Appointed Day No. 6 and Transitional Provisions) (Modification) (EU Exit) Regulations 2019

Under this SI paragraph 30 of Schedule 4 and paragraph 29 of Schedule 5 to the Taxation (Cross-border Trade) Act come into force at is 11:59 pm on 7th May 2019.

The notes to the SI include a full list of the provisions of the Taxation (Cross-border Trade) Act which have been brought into force by appointed day regulations to date.