Explanatory note

These Regulations amend Schedules 9ZD and 9ZE and Parts 1 and 2 of Schedule 9ZF to the Value Added Tax Act 1994 (c. 23) (“VATA 1994”), which introduced two optional schemes to simplify VAT accounting on distance selling transactions.

The first of these schemes is the One Stop Shop (“OSS”) scheme, which was enacted in Schedule 9ZD to VATA 1994 and concerns VAT accounting for the distance selling of goods within the EU and Northern Ireland. The second is the Import One Stop Shop (“IOSS”) scheme, which was enacted in Schedule 9ZE to VATA 1994 and concerns VAT accounting for the distance selling of goods imported into the EU and Northern Ireland.

Regulation 3 amends Schedule 9ZE to VATA 1994 in connection with Joint Declaration No.1/2023 and the adoption of Decision No.1/2023 of the Joint Committee established by the Withdrawal Agreement of 24 March 2023 (known as the “Windsor Framework”). It amends the definition of a “qualifying supply of goods” at paragraph 2 of Schedule 9ZE to exclude the supply of goods located in Great Britain or the Isle of Man to consumers in Northern Ireland.

Regulation 3 also omits paragraph 36A of Schedule 9ZE to VATA 1994 and paragraph 7 of Schedule 9ZF to VATA 1994 which are no longer required as a result of the modifications made by Regulation 3 to the scope of the IOSS scheme.

The Windsor Framework documents can be found at https://www.gov.uk/government/publications/the-windsor-framework or are available in hard copy from the Foreign, Commonwealth and Development Office, King Charles Street, London, SW1A 2AH.

Regulations 4 to 6 amend Schedules 9ZD to 9ZF to VATA 1994 to apply the rules on penalties for failure to pay tax contained in Schedule 26 to the Finance Act 2021 (c. 26) and the rules on interest contained in sections 101 to 105 of, and Schedules 53 and 54 to, the Finance Act 2009 (c. 10) to the OSS and IOSS schemes. The modifications made by Regulations 4 to 6 have effect in relation to reporting periods commencing on or after 1st March 2024.

A Tax Information and Impact Note covering the OSS and IOSS schemes was published on 18 May 2021 alongside the Finance Act 2021 and is available on the website at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/987169/TIIN_-_VAT_e-commerce.pdf. A Tax Information and Impact Note covering the rules on interest and failure to pay tax was published on 17 November 2023 and is available on the website at: https://www.gov.uk/government/publications/interest-harmonisation-and-penalties-for-late-submission-and-late-payment-of-tax/interest-harmonisation-and-penalties-for-late-payment-and-late-submission. They remain an accurate summary of the impacts that apply to this instrument.