Question proposed, That the clause stand part of the Bill.

This is another clause with which we do not have a difficulty, but it is important to set out what it will do and how it will affect potential consumers and industry. The clause provides for the introduction on 15 April 2013 of a new notification system for arrivals of means of transport in the United Kingdom, and the payment of VAT due.

The Government announced in the 2011 Budget a joint initiative between HMRC and the Driver and Vehicle Licensing Agency to combat VAT fraud on vehicles brought into the UK. According to the explanatory notes,

“a person bringing a new or used road vehicle into the UK for permanent use on UK roads will have to notify HMRC within 14 days of the arrival of the road vehicle in the UK. In the case of an acquisition of a new road vehicle from within the EU, private individuals and non-VAT registered businesses will be required to pay any VAT due at the time of notification. VAT registered customers will continue to make payment via their VAT returns. In the case of a road vehicle imported from outside the EU, VAT will continue to be collected under existing arrangements.”

The measure is helpful. In the past, people have purchased, in good faith, vehicles described by the industry as grey imports, without understanding their full history. The clause is, therefore, important, not only because it will enable the Treasury to collect the taxation due, but because it will give confidence to the purchasers of vehicles that everything has been done properly and above board and that they will not be caught out at some point. We support the clause.

As we have heard, the clause will provide for the introduction of a new notification system for vehicles brought into the UK, and paying any VAT due. It is a joint initiative between HMRC and the DVLA to combat VAT fraud on road vehicles brought into the UK. At present, road vehicles are notified to HMRC by a variety of forms and a number of means that take place after licensing and registration of the road vehicle by the DVLA. Organised criminals are exploiting that weakness by registering and licensing their road vehicles with the DVLA without payment of VAT.

From 15 April 2013, a person bringing a new or used road vehicle into the UK for permanent use on UK roads will have to notify HMRC within 14 days. Private individuals and non-VAT registered businesses will be required to pay VAT due at the time of notifying the arrival of new vehicles. VAT-registered customers will continue to make payment via their VAT returns. For road vehicles imported from outside the EU VAT will continue to be collected under existing arrangements.

It will not be possible to license and register a road vehicle with the DVLA until HMRC is notified and any VAT due has been paid or, in the case of VAT-registered businesses, is assessed as secure. HMRC will be introducing an online system for notifying the arrival of all road vehicles brought into the UK. That will enable real-time verification of VAT status of notified vehicles, with the collection of VAT up front in some instances. Online  notification is expected to be the preferred method of communication, although a paper channel will also be available. To give effect to the clause, secondary legislation amending the VAT regulations, will be laid following Royal Assent.

In conclusion, the clause will reduce fraud and introduce a level playing field for those who bring road vehicles into the UK. The online system will streamline the notification process, reduce the scope for error and improve the service to customers notifying the arrival of a road vehicle to HMRC.

Question put and agreed to.

Clause 200 accordingly ordered to stand part of the Bill.