VCP11411 - New Means of Transport: Why a penalty arises: What is a breach of New Means of Transport requirements
Please note: the Section 67 VATA 1994 penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 Finance Act 2008. The Failure to Notify penalty applies to obligations to notify the acquisition of a new means of transport on or after 01/04/2010. The penalty under Section 67 VATA 1994 continues to apply where the obligation to notify the acquisition of a new means of transport occurs before 01/04/2010.
Please see the Compliance Handbook CH70000 for more information about the Failure to Notify penalty.
The current arrangements for new means of transport result from amendments to legislation introduced to implement the Single Market on 1 January 1993.
They are intended to make sure that VAT due on new means of transport is paid in the country of destination rather than the country of origin.
The conditions for acquisitions of new means of transport by non taxable persons are covered in Notice 728. The system is operated by the Personal Transport Unit (PTU) Dover and therefore local officers are not directly involved in the penalty process.
Those affected by this penalty regime will not be VAT registered or able to register for VAT, and are unlikely to have been in contact with HMRC for VAT purposes.
Although there will be no difference in the amount of consideration given to each case, the penalty regime needs to take account of the fact that they are unlikely to be generally familiar with VAT.
VAT registered traders who acquire a new means of transport will account for VAT in the normal way.
VAT registered traders who supply a tax-free vehicle for removal to another Member State, have to complete a Form VAT 411. These forms are regarded as EC Sales Lists and defaults involving them are covered in VCP11000 and VCP10900.
There are no implications under the Human Rights Act for new means of transport new means of transport penalties, see VCP10160.