I wanted to make a brief reference to this section and how it operates. It is the marginal scheme which is the fundamental change as a result of the Seventh Directive. It is one of the three fundamental changes as enunciated in the explanatory memorandum.
SECTION 112.
Question proposed: "That section 112 stand part of the Bill".
I can confirm that the section inserts a new section 10A into the VAT Act, to legislate for the margin scheme as set out in the Seventh VAT Directive. As already outlined, the Seventh VAT Directive provides a harmonised approach for the VAT treatment of second-hand goods, works of art, antiques and collectors' items. This section and sections 113 and 116 insert the necessary changes into the VAT Act to give effect to the Directive. There are a number changes in other sections consequential on these. Section 112 provides the legal basis for the margins system whereby dealers in the second-hand goods, works of art, antiques and collectors' items only pay VAT on their profit margin. This system insures that double taxation does not arise in these transactions.
The scheme is optional. Dealers in these goods can, if they wish, continue to apply the normal VAT rules to any supply. It will take effect from 1 July, 1995.
Question put and agreed to.