CELEX: 51993PC0007
Language: en
Date: 1993-01-20
Title: 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

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)
 ---pagebreak---                                 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.
 ---pagebreak--- 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.
 ---pagebreak---                                 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.
 ---pagebreak---                                                               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:
 ---pagebreak---                             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
 ---pagebreak---                                                   r
                                                                     ISSN 0254-1475
                                                                COM (93) 7 final
                                                      DOCUMENTS
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