Explanatory note

This Order, which comes into force on 1st January 2005, amends Group 2 of Schedule 9 to the Value Added Tax Act 1994 (c. 23), which exempts insurance from VAT.

Article 3 substitutes a new item 1 in Group 2 which removes the condition that VAT exemption for insurance and reinsurance transactions depends on the status of the provider. It also deletes items 2 and 3 which are no longer required, as they exempted insurance provided by specific persons or entities which is now exempted by the new item 1.

Articles 4 and 6 make consequential amendments to the cross-references to former items 1, 2 and 3 in item 4(a) and Note 2(a).

Article 5 deletes Notes (A1), (B1) and C1) which defined terms in the former items 1, 2 and 3 which no longer appear in the Group. It also means that a contract of insurance (now amended to “contract of insurance or reinsurance”) in item 4(a) is no longer defined by reference to the Financial Services and Markets Act 2000 (c. 8).

A full regulatory impact assessment has not been produced for this instrument as it has negligible impact on the costs of business, charities or voluntary bodies.