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Special scheme for agricultural machinery.
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131.—The Principal Act is hereby amended by the insertion of the following section after section 12B (inserted by the Act of 1995):
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“12C.—(1) A taxable dealer who purchases agricultural machinery from a flat-rate farmer shall, subject to the provisions of this section and in accordance with subparagraph (via) of paragraph (a) of subsection (1) of section 12, be entitled to deduct the residual tax contained in the price payable by such taxable dealer in respect of that purchase.
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(2) A flat-rate farmer who supplies agricultural machinery to a taxable dealer shall, subject to section 17(2A), issue an invoice in respect of that supply.
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(3) The residual tax referred to in subsection (1) shall be determined by the formula—
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where—
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A is the purchase price of the agricultural machinery payable by the taxable dealer, and
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B is the percentage rate of tax specified in section 11(1)(a).
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(4) Where a taxable dealer supplies agricultural machinery in respect of which such dealer was entitled to deduct residual tax and where the tax chargeable in respect of that supply is less than the residual tax deducted by that dealer in respect of the purchase of that machinery, then the excess of the residual tax over the tax payable on that supply shall be deemed to be tax chargeable in respect of that supply.
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(5) In this section—
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‘agricultural machinery’ means machinery or equipment, other than a motor vehicle as defined in subsection (3) of section 12, which has been used by a flat-rate farmer for the purpose of such farmer's Annex A activity in circumstances where any tax charged on the supply of that machinery or equipment to that farmer would have been deductible by such farmer if such farmer had elected to be a taxable person at the time of that supply of the machinery or equipment to such farmer;
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‘taxable dealer’ means a taxable person who in the course or furtherance of business, whether acting on that person's own behalf, or on behalf of another person pursuant to a contract under which commission is payable on purchase or sale, purchases agricultural machinery as stock-in-trade with a view to resale.”.
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