Explanatory note

This Order, which comes into force on 13th April 2006, amends the Value Added Tax (Cars) Order 1992 (S.I. 1992/3122) in relation to finance agreements entered into on or after that date.

Article 4(1)(a) of the Value Added Tax (Cars) Order 1992 treats as neither a supply of goods nor a supply of services, the disposal of a motor car by a person who repossessed it under the terms of a finance agreement, provided certain conditions are met.

Article 3 of this Order introduces an exception to this treatment where the supplier makes an adjustment in the consideration accounted for on the original sale, whether that adjustment is required to be made under regulation 38 of the Value Added Tax Regulations 1995(S.I. 1995/2518) or is made in any other way.

Article 3 of this Order also limits the application of this exception to agreements where the motor cars delivered under those agreements are delivered on or after 1st September 2006.

Article 4 defines what is a finance agreement for the purposes of the commencement of this Order.

A full regulatory impact assessment of the effect that this instrument will have on the costs of business is available from HM Revenue and Customs, 100 Parliament Street, London SW1A 2BQ.