This Business Brief deals with the new arrangements for the investment gold exemption and outlines Customs’ approach to errors.

New arrangements On 1 January 2000 the Special Scheme for investment gold came into effect. The scheme harmonises VAT treatment of investment gold across the EC.

The scheme exempts supplies, acquisitions and imports of investment gold. It gives a limited right of input tax deduction and provides for an option to tax when dealing with other taxable traders. It also fully protects the treatment applied to transactions on the London Bullion Market.

The scheme requires special record keeping, accounting, invoicing and notification procedures for certain transactions. Traders must issue invoices containing specified details for all supplies involving investment gold. In addition, to help limit the opportunities for fraud, there are special recording, accounting and notification requirements for individual supplies which exceed #5,000 or for supplies to a single customer which total more than #10,000 over the course of a year.

These special requirements apply regardless of whether a trader is registered for VAT.

Further detail is available in Public Notice 701/21 Gold.

Investment gold is gold in bar or wafer form of a purity of not less than 995 thousandths. Certain gold coins are also regarded as investment gold if they:
– were minted after 1800,
– are or have been legal tender in the country of origin,
– of a purity of not less than 900 thousandths, and
– are not normally sold for a value exceeding the gold value by more than 80%.

A list of gold coins which are deemed to meet these criteria can be found in Public Notice 701/21A Investment gold coins.

Industrial gold, such as gold used in jewellery manufacture, is NOT affected by these changes and remains taxable.

Flexible approach to errors

Given that the scheme is new and has several different aspects Customs recognise that there may be genuine misunderstandings and errors by traders operating the scheme. Customs will deal flexibly with such errors for an initial period ending on 30 June 2000, depending on the circumstances of the individual case. Please contact your local VAT advice centre (listed under Customs & Excise in the telephone directory) if you have any questions.

Further information

As an interim measure, advance copies of Customs’ notices 701/21 Gold and 701/21A Investment gold coins are available in photocopy form from local VAT advice centres and from Customs’ web site at

Printed copies should be available by mid February and we advise traders to ensure they do receive printed copies when they are available as they contain some amendments, in particular to the sections dealing with imports, exports and the special accounting scheme for gold.


This Business Brief gives details of an extra-statutory concession (ESC) which allows businesses to use an alternative means of valuing refurbishment or fitting out work for the purposes of the capital goods scheme. It was effective from 1 January 2000.


The capital goods scheme allows businesses to adjust the amount of input VAT originally claimed on certain buildings and computers to reflect any changes in the use to which they are put over a period of time. The scheme was extended with effect from 3 July 1997 to include buildings where the value of standard-rated costs on a refurbishment or fitting out work is 250,000 pounds or more.

In calculating the value of refurbishment or fitting out work, businesses should only include the value of capital expenditure on services and ‘goods affixed to the building’, such as suspended ceilings and installed lighting. The value should not include the value of goods which do not become affixed to the building, such as office furniture.

Some businesses have found it difficult or costly to identify the value of ‘goods affixed’ separately from the value of other goods which do not become affixed to the building. The purpose of this ESC is to relieve the administrative and financial burden on businesses while Customs consider a longer term solution.

The concession

A business seeking to determine the value of a capital item can now include any additional amount of capital expenditure, over and above that incurred on supplies of services and goods affixed to the building, incurred in connection with the refurbishment or fitting out work.

Therefore businesses no longer need to separate out the value of goods which are not affixed from the total value of capital expenditure on refurbishment or fitting out and can choose whether to include some or all of the goods not affixed to the building in the value of the capital item. The concessionary value will determine the corresponding amount of input tax to be adjusted under the scheme.


This concession applies only to capital items where the adjustment period starts on or after 1 January 2000. Businesses wishing to include goods not affixed in the value of capital expenditure for items whose adjustment period started before 1 January should seek prior approval from their local VAT office.

In order to use this concession businesses must keep a record of the concessionary value of the capital expenditure including full details of the supplies on which the value was determined.

The concessionary value must be used in calculating adjustments to the claimed input tax for the whole of the adjustment period.

If Customs consider that this concession is being used to avoid tax then they may withdraw or restrict its use.

Businesses should be aware, that by electing to use an enhanced value, an item may fall within the capital goods scheme by virtue of exceeding the scheme value threshold, where under the normal legal value it would not.

Further details

If you have any further questions, please contact your local VAT Business Advice Centre listed under HM Customs and Excise in your telephone directory. Notice 706/2 will be amended to reflect this concession.


Notice 48

A revised edition of Notice 48 Extra-statutory concessions dated December 1999 has been issued. It replaces the September 1997 version.

This business brief and other information about HM Customs & Excise can be found at our website:

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