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Amendment of section 12 (deduction for tax borne or paid) of Principal Act.
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73.— Section 12 of the Principal Act is amended—
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(a) in subsection (1)—
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(i) in paragraph (a) by deleting “and” in subparagraph (vii), and by substituting “section 12A, and” for “section 12A.” in subparagraph (viii),
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(ii) by inserting the following after subparagraph (viii) of paragraph (a):
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“(ix) subject to subsection (4) and regulations (if any), 20 per cent of the tax charged to that accountable person in respect of the purchase, hiring, intra-Community acquisition or importation of a qualifying vehicle (within the meaning assigned by paragraph (c)), where that vehicle is used primarily for business purposes, being at least 60 per cent of the use to which that vehicle is put, and where that accountable person subsequently disposes of that vehicle the tax deducted by that person in accordance with this subsection shall be treated as if it was not deductible by that person for the purposes of paragraph (xxiv)(c) of the First Schedule:”,
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and
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(iii) by inserting the following after paragraph (b):
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“(c) For the purposes of paragraph (a)(ix) and subsection (4)(ba), a ‘qualifying vehicle’ means a motor vehicle which, for the purposes of vehicle registration tax is first registered, in accordance with section 131 of Finance Act 1992, on or after 1 January 2009 and has, for the purposes of that registration, a level of CO 2 emissions of less than 156g/km.”,
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(b) in subsection (3)(a)(iii) by inserting “subject to subsection (1)(a)(ix)” before “the purchase”,
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(c) in subsection (4) by inserting the following after paragraph (b):
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“(ba) For the purposes of this subsection, the reference in paragraph (b) to ‘tax, borne or payable’ shall, in the case of an acquisition of a qualifying vehicle (within the meaning assigned by subsection (1)(c)) be deemed to be a reference to ‘20 per cent of the tax, borne or payable’.”,
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and
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(d) by inserting the following after subsection (4):
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“(4A) (a) Where an accountable person deducts tax in relation to the purchase, intra-Community acquisition or importation of a qualifying vehicle in accordance with subsection (1)(a)(ix) and that person disposes of that qualifying vehicle within 2 years of that purchase, acquisition or importation, then that person shall be obliged to reduce the amount of the tax deductible by that person for the taxable period in which the vehicle is disposed of by an amount calculated in accordance with the following formula:
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TD x (4-N)
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4
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where—
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TD is the amount of tax deducted by that accountable person on the purchase, acquisition or importation of that vehicle, and
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N is a number that is equal to the number of days from the date of purchase, acquisition or importation of the vehicle by that accountable person to the date of disposal by that person, divided by 182 and rounded down to the nearest whole number,
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but if that N is greater than 4 then N shall be 4.
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(b) Where an accountable person deducts tax in relation to the purchase, intra-Community acquisition or importation of a qualifying vehicle in accordance with subsection (1)(a)(ix) and the vehicle is subsequently used for less than 60 per cent business purposes in a taxable period, then that person is obliged to reduce the amount of tax deductible by that person for that taxable period by an amount calculated in accordance with the following formula:
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TD x (4-N)
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4
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where—
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TD is the amount of tax deducted by that accountable person on the purchase, acquisition or importation of that vehicle, and
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N is a number that is equal to the number of days from the date of purchase, acquisition or importation of the vehicle by that accountable person to the first day of the taxable period in which the vehicle is used for less than 60 per cent business purposes, divided by 182 and rounded down to the nearest whole number,
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but if that N is greater than 4 then N shall be 4.”.
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