Explanatory note

This Order amends, with effect from 1st June 1996 the Value Added Tax (Payments on Account) Order 1993 (“the principal Order”) as amended by the Value Added Tax (Payments on Account) (Amendment) Order 1995.

Articles 3(a) and 11 substitute references to the Value Added Tax Act 1994 for references to the Value Added Tax Act 1983.

Article 6 revokes article 10 of the principal Order. The seven day extension to the time for making payments on account hitherto afforded to persons paying by credit transfer is withdrawn.

Articles 3(b), 4 and 5 are consequential amendments to article 6. Further references to article 10 in the principal Order are removed as is the definition of “credit transfer” which is no longer required.

Articles 7 and 8 of the Order respectively amend articles 11 and 12 of the principal Order. In each case the amount of the payment on account is reduced by 50 per cent. to one twenty-fourth (as opposed to one twelfth) of the liability in the reference period and the requirement to make payments on account is made subject to the option given by article 10 of the Order.

Article 9 makes consequential amendments to articles 13, 14 and 15 of the principal Order arising from changes to articles 11 and 12 of the principal Order.

Article 10 of the Order inserts into the principal Order a new article 12A. Persons in the scheme are given an option to pay the actual VAT liability for the preceding month rather than the predetermined amount e.g. a payment on account under the option, due on 28th February, would represent the actual liability for January rather than one twenty-fourth of the liability in the reference year. The option must be notified in writing to the Commissioners. The Commissioners may revoke the option if the correct amount is not paid.