VALUE ADDED TAX 1 This Order may be cited as the Value Added Tax (Cars) (Amendment) (No. 2) Order 1995 and shall come into force on 1st August 1995. 2 The Value Added Tax (Cars) Order 1992 shall be amended in accordance with articles 3 to 8 of this Order. 3 In article 4— a at the beginning of paragraph (1) there shall be inserted “Subject to paragraphs (1A) to (2) below,”; b in sub-paragraph (c) of paragraph (1) the words “where” to the end shall be deleted; c after sub-paragraph (e) of paragraph (1) there shall be added the following— f a relevant supply of services by a taxable person to whom a motor car has been let on hire or supplied or by whom a motor car has been acquired from another member State or imported. ; and d after paragraph (1) there shall be inserted the following— 1A Paragraph (1) above shall not apply in relation to a case falling within paragraph (1)(a) to (c) above unless the tax on any previous supply, acquisition or importation was wholly excluded from credit under section 25 of the Act. 1B Paragraph (1) above shall not apply in relation to a case falling within paragraph (1)(f) above unless the tax on any previous letting on hire, supply, acquisition or importation was wholly or partly excluded from credit under section 25 of the Act. 1C For the purposes of paragraph (1)(f) above a relevant supply of services is— a the letting on hire of a motor car to any person for no consideration or for a consideration which is less than that which would be payable in money if it were a commercial transaction conducted at arms length; or b the making available of a motor car (otherwise than by letting it on hire) to any person (including, where the taxable person is an individual, himself, and where the taxable person is a partnership, a partner) for private use, whether or not for a consideration. 4 After article 4 there shall be inserted the following— 4A Paragraph 5(4) of Schedule 4 to the Act shall not apply in relation to a motor car to which either article 5 or article 6 below applies which is used or made available in circumstances where, but for the operation of that paragraph, it would be treated by virtue of one or other of those articles as supplied to and by a taxable person. . 5 For article 5 there shall be substituted the following— 1 This article applies to any motor car— a which has been produced by a taxable person otherwise than by the conversion of a vehicle obtained by him; b which has been produced by the taxable person by the conversion of another vehicle (whether a motor car or not) and in relation to which the condition in paragraph (2) below is satisfied; or c which was supplied to, or acquired from another member State or imported by, a taxable person and in relation to which the condition in paragraph (2) below is satisfied, but does not apply to any motor car to which article 6 below applies. 2 The condition referred to in paragraph (1)(b) and (c) above is that the tax on the supply to, or acquisition or importation by, the taxable person of the motor car or the vehicle from which it was converted, as the case may be, was not wholly excluded from credit under section 25 of the Act. 3 Where a motor car to which this article applies— a has not been supplied by the taxable person in the course or furtherance of a business carried on by him; and b is used by him such that it is not used exclusively for the purposes of a business carried on by him, it shall be treated for the purposes of the Act as both supplied to him for the purposes of a business carried on by him and supplied by him for the purposes of that business. . 6 In article 6, for paragraphs (1) and (1A) there shall be substituted the following— 1 This article applies to any motor car which has been supplied to, or acquired from another member State or imported by, a taxable person primarily for the purpose of— a being provided by him for hire with the services of a driver for the purpose of carrying passengers; b being provided by him for self-drive hire; or c being used as a vehicle in which instruction in the driving of a motor car is to be given by him. 1A Where a motor car to which this article applies— a is neither supplied nor converted into another vehicle (whether a motor car or not) by the taxable person, in either case, in the course or furtherance of any business carried on by him; and b is used by him primarily for a purpose other than one of the purposes described in paragraph (1) above, but is not used exclusively for the purposes of a business carried on by him, it shall be treated for the purposes of the Act as both supplied to him for the purposes of that business and supplied by him in the course or furtherance of that business. . 7 After article 6 there shall be inserted the following— 6A For the purposes of articles 5 and 6 above article 7 of the Value Added Tax (Input Tax) Order 1992 shall apply for the purpose of determining whether a motor car is used exclusively for the purposes of the taxable person’s business as it would apply for the purpose of determining whether he so intended to use it. . 8 In article 8— a after sub-paragraph (b) of paragraph (2) there shall be inserted the following— bb a supply to which the provisions of article 7(4) of the Value Added Tax (Input Tax) Order 1992 applied; ; b sub-paragraph (d) of paragraph (3) shall be deleted; and c paragraph (4) shall be deleted. 9 The Value Added Tax (Cars) (Amendment) Order 1993 is hereby revoked. Tim Wood Andrew Mitchell Two of the Lords Commissioners of Her Majesty’s Treasury 29th June 1995