Clause 20 - Supplies arising from prior grant of fee simple
Finance Bill
9:45 am
Mr Stephen O'Brien (Eddisbury, Conservative)
Clause 20 relates to the time of supply of land transactions. The Economic Secretary has explained the clause thoroughly. Basic VAT law—for the record, paragraph 1(a) of schedule 9 to the Value Added Tax Act 1994—states that the sale of a freehold new building or new civil engineering work must be standard rated, regardless of whether the seller has elected it. However, by entering into sale contracts where payment of the price was delayed, sellers of new buildings or works could take advantage of section 96(10A) of the 1994 Act and VAT regulation 84(2) in its original form, which delayed the time of supply until payment of the price and made the sale exempt. That provision has been used in VAT avoidance and was partially dealt with by a statutory instrument in November 2002, which amended VAT regulation 84(2).
By inserting new section 96(10B), clause 20 lays down a general rule that if at the date of the grant—in other words, completion—the building or the work is new, the price will always be standard rated, even if payment is delayed. Having considered the Minister's explanation carefully, I regard the clause as reasonably sensible.
Question put and agreed to.
Clause 20 ordered to stand part of the Bill.