Finance Bill 2002: EXPLANATORY NOTE
CLAUSE 24: INVOICES
SUMMARY
1. Clause 24 simplifies and modernises the rules on VAT invoicing and provides for regulations to be made for self-billing and electronic transmission of invoices. These changes to VAT invoicing will enable the UK to meet its obligations to implement Directive 2001/115/EC by 1 January 2004.
DETAILS OF THE CLAUSE
2. Subsection (1) amends section 6(9) (Time of supply) and Schedule 11 (Administration, Collection and Enforcement) of the Value Added Tax Act 1994 (?the Act?) to the extent that they are superseded by the amendments described below.
3. Subsection (2) inserts new paragraphs 2A (VAT invoices) and 2B (Self-billed invoices) to Schedule 11 of the Act.
4. New sub-paragraph 2A(1) provides for regulations to require a supplier to provide a VAT invoice to the customer.
5. New sub-paragraph 2A(2) provides for regulations giving the details to be shown on a VAT invoice.
6. New sub-paragraph 2A(3) allows the Commissioners to relieve certain taxable persons from having to show some of the details required on a VAT invoice.
7. New sub-paragraph 2A(4) provides for regulations to provide time limits for the issue of tax invoices and for the Commissioners to extend the time limits in particular cases.
8. New sub-paragraph 2A(5) provides for regulations to lay down conditions for invoicing by third parties on behalf of the supplier (outsourcing), summary invoicing covering more than one supply, and amending documentation.
9. New sub-paragraph 2A(6) provides for regulations to enable the Commissioners to request recipients of VAT invoices in other languages to provide an English translation.
10. New sub-paragraph 2A(7) provides that the regulations made under paragraph 2A may apply to particular types of supply or to certain taxable persons and may make different provisions in different cases.
11. New sub-paragraph 2B(1) states that the paragraph applies where a taxable person provides a VAT invoice to himself in respect of supplies received from another taxable person (self-billing).
12. New sub-paragraph 2B(2) allows conditions for self-billing to be set out in regulations or specified in a notice published by the Commissioners.
13. New sub-paragraph 2B(3) provides that a self-billed invoice is not to be treated as issued by the supplier for the purposes of determining the time of supply under section 6(4) of the Act.
14. New sub-paragraph 2B(4) provides for a self-billed invoice to be treated as issued by the supplier for the purposes of determining the time of supply under sections 6(5) and (6) of the Act.
15. New sub-paragraph 2B(5) provides that the regulations made under paragraph 2B may apply to particular types of supply or to certain taxable persons and may make different provisions in different cases.
16. Subsection (3) substitutes a new paragraph 3 of Schedule 11 to the Act.
17. New sub-paragraph 3(1) allows for regulations to lay down conditions for electronic transmission and storage of VAT invoices.
18. New sub-paragraph 3(2) describes the documents to which the paragraph applies.
19. New subparagraph 3(3) provides that regulations may make different provisions in different cases.
20. Subsection (4) provides for consequential amendments to other sections of the Act. In section 6(15) and section 88(5) references to ?paragraph 2? are amended to ?paragraph 2A?. In section 83 (appeals) provision is made for appeals against conditions imposed in particular cases relating to self-billing and electronic transmission and storage of VAT invoices. In section 88(6) the reference to 'section 6(9)? is replaced with a reference to ?paragraph 2B(4) of Schedule 11?.
21. Subsection (5) provides for the changes introduced, to come into force on dates prescribed in an appointed day order.
22. Subsection (6) allows any appointed day order to contain transitional provisions and savings.
BACKGROUND
23. These changes to the Act implement EC Directive (2001/115/EC). The aim is to simplify VAT invoicing by setting out conditions for self-billing and electronic storage and transmission of VAT invoices rather than requiring pre-authorisation or approval as is the present case. The regulations provided for by the changes will come into force on 1 January 2004.