The Free Zones (Customs, Excise and Value Added Tax) Regulations 2021

Amendment of Schedule 8 to the Value Added Tax Act 1994

8.—(1) Schedule 8 to the Value Added Tax Act 1994 (zero-rating) is amended as follows.

(2) In the table in Part 1 (index), in the appropriate place insert—

(3) In Part 2 (the Groups) after Group 21 insert—

“GROUP 22—FREE ZONES

Item No

1.  The supply by one free zone business (“A”) to another free zone business (“B”) of—

(a)free zone procedure goods, if—

(i)the supply of the goods would (apart from this provision) be taxable(1) but not zero-rated, and

(ii)A was authorised to make the supply;

(b)a service wholly performed in the free zone on or in relation to free zone procedure goods by a person authorised to do so, if—

(i)the supply of the service would (apart from this provision) be taxable but not zero-rated, and

(ii)before a VAT invoice(2) is issued in respect of the supply, B notifies A in writing that this provision applies to the supply.

NOTES

(1) “Free zone business” means a person who is—

(a)authorised to declare goods for a free zone procedure or to carry out a free zone activity, and

(b)registered under this Act or exempted from registration under paragraph 13 of Schedule 1A to this Act(3).

(2) References to a person authorised to do a thing are references to a person authorised in accordance with the Special Procedures Regulations to do that thing.

(3) “Special Procedures Regulations” means the Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018(4).

(4) “Free zone activity” and “free zone procedure” have the meanings given by the Special Procedures Regulations(5).

(5) Goods are “free zone procedure goods” if they—

(a)are subject to a free zone procedure, or

(b)comprise goods within paragraph (a) that have been combined with domestic goods by a person authorised to do so.

(6) “Domestic goods” has the meaning given by section 33 of the Taxation (Cross-border Trade) Act 2018(6).

(7) “Free zone” means an area in the United Kingdom designated as a special area for customs purposes under section 100A of the Management Act(7).”.