COMMISSION OF THE EUROPEAN CCfttofDNITIES 
COHC^a)7 final 
Brussels, 20 January 1993 
Proposal for a 
COUNCIL DECISION 
AUTHORIZING THE UNITED KINGDOM TO APPLY AN OPTIONAL MEASURE 
DEROGATING FROM ARTICLE 17 OF THE SIXTH DIRECTIVE (77/388/EEC) 
ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES 
RELATING TO TURNOVER TAXES 
(presented by the Commission) 
A 
EXPLANATORY MEMORANDUM 
By Council Decision 90/497/EEC of 24 September 1990W, the 
United Kingdom was authorized, on the basis of Article 27(1) to 
(4) of the Sixth VAT Directive 77/388/EECC2), to apply a measure 
derogating from Article 17(1) of that Directive until 
31 December 1992. 
The object of that derogation, which is designed to simplify 
collection of the tax, is to permit deduction of input tax by 
firms that have opted for the simplified scheme only when it is 
paid to the supplier. Under this simplified scheme, firms whose 
turnover does not exceed a given ceiling may defer payment of 
tax until receipt of the price. 
By letter dated 26 October 1992 and received by the 
Commission's Secretariat-General on 28 October 1992, the United 
Kingdom Government submitted to the Commission a request for 
the previously authorized derogation to be extended until 
31 December 1996 and for the ceiling to be increased from 
UKL 300 000 to UKL 350 000. 
In accordance with Article 27(3) of the Sixth Directive, the 
other Member States were informed by letter dated 
27 November 1992 of the United Kingdom's request. 
The United Kingdom considers the extension of the derogation to 
be amply justified in view of the limited number of firms that 
have opted for the simplified scheme and the favourable 
reception given it by the business organizations concerned. 
The Commission notes that in 1990 the derogation was authorized 
by the Council with a turnover limit which was, at the time, 
approximately equivalent to ECU 410 000. In its present request 
for authorization, the United Kingdom authorities wish the 
turnover limit to be increased to UKL 3 50 000, which is 
(1) OJ L 276 of 6.10.1990, p. 45. 
(2) OJ L 145 of 13.6.1977, p. 1. 
approximately equal to ECU 432 000. This adjustment is 
considered by the Commission to be acceptable. 
The Commission considers the derogation from Article 17(1) to 
be a reasonable adjustment to the option provided for in 
Article 10(2). 
The Commission considers that the United Kingdom can be 
authorized to apply the derogation for a period expiring on 
31 December 1996. This further authorization does not of course 
prejudice the solution to be adopted for the right of deduction 
under the proposed 22nd VAT Directive on the VAT scheme 
applicable to small and medium-sized businesses. 
Proposal for a 
COUNCIL DECISION 
AUTHORIZING THE UNITED KINGDOM TO APPLY AN OPTIONAL MEASURE 
DEROGATING FROM ARTICLE 17 OF THE SlXTII DIRECTIVE (77/388/EEC) 
ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES 
RELATING TO TURNOVER TAXES 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, 
Having regard to the Sixth Council Directive (77/388/EEC) of 
17 May 1977 on the harmonization of the laws of the Member 
States relating to turnover taxes - Common system of value 
added tax: uniform basis of assessment^, hereinafter referred 
to as the "Sixth Directive", and in particular Article 27 
thereof, 
Having regard to the proposal from the Commission, 
Whereas, under the terms of Article 27(1) of the Sixth 
Directive, the Council, acting unanimously on a proposal from 
the Commission, may authorize any Member State to introduce 
special measures for derogation from the provisions of that 
Directive in order to simplify the procedure for charging the 
tax or to prevent certain types of tax evasion or avoidance; 
Whereas the United Kingdom was authorized by Council Decision 
90/497/EEC adopted on 24 September 1990<2) in accordance with 
the procedure laid down in Article 27(1) to (4) of the Sixth 
(1) OJ L 145 of 13.6.1977, p. 1. 
(2) OJ L 276 of 6.10.1990, p. 45. 
y 
Directive to apply a measure derogating from Article 17(1) of 
the said Directive until 31 December 1992; 
Whereas the United Kingdom, by means of a letter dated 
26 October 1992 and received by the Commission on 
28 October 1992, requested authorization to extend the said 
derogation until 31 December 1996; 
Whereas the other Member States were informed on 
27 November 1992 of the United Kingdom's request; 
Whereas this special measure derogating from Article 17(1) of 
the Sixth Directive forms part of an optional system of 
taxation for firms with an annual turnover of less than 
UKL 350 000 based on the third subparagraph of paragraph 2 of 
Article 10 of the Sixth Directive, which permits payment of tax 
to be deferred until receipt of the price; 
Whereas the United Kingdom wishes to increase the turnover 
ceiling from UKL 300 000 to UKL 350 000 to take account of 
inflation; 
Whereas that request can be accepted in view of the limited 
number of firms that have opted for this simplified scheme and 
the limited duration of this extension; 
Whereas the derogation in question does not have a negative 
effect on the own resources of the European Communities 
accruing from VAT, 
HAS ADOPTED THIS DECISION: 
Article 1 
By way of derogation from the provisions of Article 17(1) of 
the Sixth VAT Directive, the United Kingdom is hereby 
authorized until 31 December 1996, to provide within an 
optional scheme that enterprises with an annual turnover of 
less than UKL 350 000 must postpone the right of deduction of 
tax until it has been paid to the supplier. 
Article 2 
This Decision is addressed to the United Kingdom. 
Done at Brussels, 
For the Council, 
The President 
r 
ISSN 0254-1475 
COM (93) 7 final 
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EN 09 
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