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Value Added Tax Act 1994

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Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.

[F1PART 5U.K.Collection of F2...UK VAT

Textual Amendments

F1Schs. 9ZD-9ZF inserted (10.6.2021 for specified purposes, 1.7.2021 for specified purposes, 1.3.2024 for specified purposes) by Finance Act 2021 (c. 26), s. 95(6)(a), Sch. 18 para. 6; S.I. 2021/770, regs. 3, 4 (with regs. 5-7); S.I. 2024/130, regs. 3, 4

Assessments: general modifications of section 73U.K.

22(1)For the purposes of this Schedule, section 73 (failure to make returns etc) is to be read as if—U.K.

(a)the reference in subsection (1) of that section to returns required under this Act included relevant non-UK returns, F3...

(b)references in that section to a prescribed accounting period included a tax period [F4, and

(c)references in that section to a VAT credit included a repayment to persons who are not taxable persons of an amount of VAT paid under and in accordance with this Schedule.]

(2)See also the modifications in paragraph 23.

(3)In this Schedule “relevant non-UK return” means a non-UK return (see paragraph 38(1)) that is required to be made (wholly or partly) in respect of scheme supplies that are treated as made in the United Kingdom.

Textual Amendments

Assessments in connection with increase in consideration: modificationsU.K.

23(1)Sub-paragraphs (2) to (4) make modifications of sections 73 and 76 which—U.K.

(a)have effect for the purposes of this Schedule, and

(b)are in addition to any other modifications of those sections made by this Schedule.

(2)Section 73 has effect as if, after subsection (3), there were inserted—

“(3A)Where a person has failed to make an amendment or notification that the person is required to make under paragraph 33 of Schedule 9ZD in respect of an increase in the consideration for a UK supply (as defined in paragraph 33(7)), the Commissioners may assess the amount of VAT due from the person as a result of the increase to the best of their judgement and notify it to the person.

(3B)An assessment under subsection (3A)—

(a)is of VAT due for the tax period mentioned in paragraph 33(1)(a) of Schedule 9ZD;

(b)must be made within the time limits provided for in section 77, and must not be made after the end of the period of—

(i)2 years after the end of the tax period referred to in paragraph 33(1)(a) of Schedule 9ZD, or if later,

(ii)one year after evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.

(3C)Subject to section 77, where further evidence such as is mentioned in subsection (3B)(b)(ii) comes to the Commissioners' knowledge after they have made an assessment under subsection (3A), another assessment may be made under that subsection, in addition to any earlier assessment.”

(3)The reference in section 73(9) to subsection (1) of that section is taken to include a reference to section 73(3A) (treated as inserted by sub-paragraph (2)).

(4)Section 76 (assessment of amounts due by way of penalty, interest or surcharge) is to be read as if the reference in subsection (5) of that section to section 73(1) included a reference to section 73(3A) (treated as inserted by sub-paragraph (2)).

Assessments: consequential modificationsU.K.

24U.K.References to prescribed accounting periods in the following provisions are to be read in accordance with the modifications made by paragraphs 22 and 23—

(a)section 74 (interest on VAT recovered or recoverable by assessment);

(b)section 76 (assessment of amounts due by way of penalty, interest or surcharge);

(c)section 77 (assessments: time limits etc).

Deemed amendments of F5... returnsU.K.

Textual Amendments

25(1)Where a person who has made [F6an OSS scheme return or] a relevant non-UK return makes a claim under paragraph 31(7)(b) (overpayments) in relation to an error in the return, the F7... return is taken for the purposes of this Act to have been amended by the information in the claim.U.K.

(2)Where a person who has made [F8an OSS scheme return or] a relevant non-UK return gives the Commissioners a notice relating to the return under [F9paragraph 33(2)] (increase or decrease in consideration), the F10... return is taken for the purposes of this Act to have been amended by that information.

(3)Where (in a case not falling within sub-paragraph (1) or (2)) a person who has made [F11an OSS scheme return or] a relevant non-UK return notifies the Commissioners F12... of a change that needs to be made to the return to correct an error, or rectify an omission, in it, the F13... return is taken for the purposes of this Act to have been amended by that information.

Textual Amendments

Interest on VAT: “reckonable date”U.K.

26(1)Sub-paragraph (2) states the “reckonable date” for the purposes of section 74(1) and (2) for any case where an amount carrying interest under that section—U.K.

(a)is an amount assessed under section 73(2) (refunds etc) [F14in relation to an OSS scheme return or] in reliance on paragraph 22, or that could have been so assessed, and

(b)was correctly paid or credited to the person, but would not have been paid or credited to the person had the facts been as they later turn out to be.

(2)The “reckonable date” is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).

(3)Sub-paragraph (4) states the “reckonable date” for any other case where an amount carrying interest under section 74 is assessed under section 74(1) or (2) [F15in relation to an OSS scheme return or] in reliance on paragraph 22, or could have been so assessed.

(4)The “reckonable date” is taken to be the latest date by which [F16the OSS scheme return or] a non-UK return was required to be made for the tax period to which the amount assessed relates.

(5)Where section 74(1) or (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount assessed under section 73(3A) (treated as inserted by paragraph 23(2)), the “reckonable date” for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 33(2).

Textual Amendments

Default surcharge: notice of special surcharge periodU.K.

27(1)A person who is required to make [F17an OSS scheme return or] a relevant non-UK return for a tax period is regarded for the purposes of this paragraph and paragraph 28 as being in default in respect of that period if either—U.K.

(a)conditions 1A and 2A are met, or

(b)conditions 1B and 2B are met,

(but see also paragraph 29).

(2)The conditions are as follows—

(a)condition 1A is that [F18the Commissioners or] the tax authorities for the administering member State [F19(as the case may be)] have not received the return by the deadline for submitting it;

(b)condition 2A is that [F20the Commissioners or] those tax authorities [F21(as the case may be)] have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the obligation to submit the return;

(c)condition 1B is that, by the deadline for submitting the return, [F22the Commissioners or] those tax authorities [F23(as the case may be)] have received the return but have not received the amount of VAT shown on the return as payable by the person in respect of the tax period;

(d)condition 2B is that [F24the Commissioners or] those tax authorities [F25(as the case may be)] have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the VAT outstanding.

(3)The Commissioners may serve on a person who is in default in respect of a tax period a notice (a “special surcharge liability notice”) specifying a period—

(a)ending on the first anniversary of the last day of that tax period, and

(b)beginning on the date of the notice.

(4)A period specified under sub-paragraph (3) is a “special surcharge period”.

(5)If a special surcharge liability notice is served in respect of a tax period which ends on or before the day on which an existing special surcharge period ends, the special surcharge period specified in that notice must be expressed as a continuation of the existing special surcharge period (so that the existing period and its extension are regarded as a single special surcharge period).

Textual Amendments

Further default after service of noticeU.K.

28(1)If a person on whom a special surcharge liability notice has been served—U.K.

(a)is in default in respect of a tax period ending within the special surcharge period specified in (or extended by) that notice, and

(b)has outstanding special scheme VAT for that tax period,

the person is to be liable to a surcharge of the amount given by sub-paragraph (2).

(2)The surcharge is equal to whichever is the greater of—

(a)£30, and

(b)the specified percentage of the person's outstanding special scheme VAT for the tax period.

(3)The specified percentage depends on whether the tax period is the first, second or third etc period in respect of which the person is in default and has outstanding special scheme VAT, and is—

(a)for the first such tax period, 2%;

(b)for the second such tax period, 5%;

(c)for the third such tax period, 10%;

(d)for each such tax period after the third, 15%.

[F26(4)“Special scheme VAT”, in relation to a person, means VAT that the person is liable to pay in respect of scheme supplies treated as made in the United Kingdom to—

(a)the Commissioners under this Schedule, or

(b)the tax authorities for the administering member State under a non-UK scheme.]

(5)A person has “outstanding special scheme VAT” for a tax period if some or all of the special scheme VAT for which the person is liable in respect of that period has not been paid by the deadline for the person to submit [F27an OSS scheme return or] a non-UK return for that period (and the amount unpaid is referred to in sub-paragraph (2)(b) as “the person's outstanding special scheme VAT” for the tax period).

Textual Amendments

Default surcharge: exceptions for reasonable excuse etcU.K.

29(1)A person who would otherwise have been liable to a surcharge under paragraph 28(1) is not to be liable to the surcharge if the person satisfies the Commissioners or, on appeal, the tribunal that, in the case of a default which is material to the surcharge—U.K.

(a)[F28the OSS scheme return or] the non-UK return or, as the case may be, the VAT shown on that return, was despatched at such a time and in such manner that it was reasonable to expect that it would be received by [F29the Commissioners or] the tax authorities for the administering member State [F30(as the case may be)] within the appropriate time limit, or

(b)there is a reasonable excuse for the return or the VAT not having been so despatched.

(2)Where sub-paragraph (1) applies to a person—

(a)the person is treated as not having been in default in respect of the tax period in question, and

(b)accordingly, any special surcharge liability notice the service of which depended on that default is regarded as not having been served.

(3)A default is “material” to a surcharge if—

(a)it is the default which gives rise to the surcharge, under paragraph 28(1), or

(b)it is a default which was taken into account in the service of the special surcharge liability notice on which the surcharge depends and the person concerned has not previously been liable to a surcharge in respect of a tax period ending within the special surcharge period specified in or extended by that notice.

(4)A default is left out of account for the purposes of paragraphs 27(3) and 28(1) if—

(a)the conduct by virtue of which the person is in default is also conduct falling within section 69(1) (breaches of regulatory provisions), and

(b)by reason of that conduct the person concerned is assessed to a penalty under that section.

(5)If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a tax period specified in the direction is to be left out of account for the purposes of paragraphs 27(3) and 28(1).

(6)Section 71(1) (meaning of “reasonable excuse”) applies for the purposes of this paragraph as it applies for the purposes of sections 59 to 70.

Textual Amendments

Interest in certain cases of official errorU.K.

30(1)Section 78 (interest in certain cases of official error) applies as follows in relation to a case where, due to an error on the part of the Commissioners—U.K.

(a)a person has accounted under a non-UK scheme for an amount by way of UK VAT that was not UK VAT due from the person, and as a result the Commissioners are liable under paragraph 31 to pay (or repay) an amount to the person, F31...

(b)(in a case not falling within paragraph (a)), a person has paid, in accordance with an obligation under a non-UK scheme, an amount by way of UK VAT that was not UK VAT due from the person and which the Commissioners are in consequence liable to repay to the person [F32, or

(c)a person has paid, in accordance with this Schedule, an amount by way of UK VAT that was not UK VAT due from the person and which the Commissioners are in consequence liable to repay to the person.]

(2)Section 78 has effect as if the condition in section 78(1)(a) were met in relation to that person.

[F33(3)In the application of section 78 as a result of this paragraph, section 78(12)(b) is to be read as providing that—

(a)in a case within sub-paragraph (1)(a) or (b), any reference in that section to a return is to a return required to be made under a non-UK scheme;

(b)in a case within sub-paragraph (1)(c), any reference in that section to a return is to a return required to be made under this Schedule.]

(4)In section 78, as it applies as a result of this paragraph, “output tax” has the meaning that expression would have if the reference in section 24(2) to a “taxable person” were to a “person”.

Textual Amendments

OverpaymentsU.K.

31(1)A person may make a claim if the person—U.K.

(a)has made a non-UK return for a tax period relating wholly or partly to scheme supplies treated as made in the United Kingdom,

(b)has accounted to the tax authorities for the administering member State for VAT in respect of those supplies, and

(c)in doing so has brought into account as UK VAT due to those authorities an amount (“the overpaid amount”) that was not UK VAT due to them.

(2)A person may make a claim if the person has, as a participant in a non-UK scheme, paid (to the tax authorities for the administering member State or to the Commissioners) an amount by way of UK VAT that was not UK VAT due (“the overpaid amount”), otherwise than in the circumstances mentioned in sub-paragraph (1)(c).

(3)A person who is or has been a participant in a non-UK scheme may make a claim if the Commissioners—

(a)have assessed the person to VAT for a tax period, and

(b)in doing so, have brought into account as VAT an amount (“the amount not due”) that was not VAT due.

(4)Where a person makes a claim under sub-paragraph (1) or (2), the Commissioners must repay the overpaid amount to the person.

(5)Where a person makes a claim under sub-paragraph (3), the Commissioners must credit the person with the amount not due.

(6)Where—

(a)as a result of a claim under sub-paragraph (3) an amount is to be credited to a person, and

(b)after setting any sums against that amount under or by virtue of this Act, some or all of the amount remains to the person's credit,

the Commissioners must pay (or repay) to the person so much of the amount as remains to the person's credit.

(7)The reference in sub-paragraph (1) to a claim is to a claim made—

(a)by correcting, in accordance with Article 61 of the Implementing Regulation, the error in the non-UK return mentioned in sub-paragraph (1)(a), or

(b)(after the expiry of the period during which the non-UK return may be amended under Article 61) to the Commissioners.

(8)Sub-paragraphs (1) and (2) do not require any amount to be repaid except to the extent that is required by Article 63 of the Implementing Regulation.

Overpayments: supplementaryU.K.

32(1)In section 80 (credit for, or repayment of, overstated or overpaid VAT), subsections (3) to (3C) (unjust enrichment) and (4A), (4C) and (6) (recovery by assessment of amounts wrongly credited) have effect as if—U.K.

(a)a claim—

(i)under paragraph 31(1) were a claim under section 80(1),

(ii)under paragraph 31(2) were a claim under section 80(1B), and

(iii)under paragraph 31(3) were a claim under section 80(1A);

(b)references in that section to a prescribed accounting period included a tax period.

(2)In section 80(3) to (3C), (4A), (4C) and (6), as modified by sub-paragraph (1), references to the crediting of amounts are to be read as including the payment of amounts.

(3)The Commissioners are not liable to repay the overpaid amount on a claim made—

(a)under paragraph 31(2), or

(b)as mentioned in paragraph 31(7)(b),

if the claim is made more than 4 years after the relevant date.

(4)On a claim made under paragraph 31(3), the Commissioners are not liable to credit the amount not due if the claim is made more than 4 years after the relevant date.

(5)The “relevant date” is—

(a)in the case of a claim under paragraph 31(1), the end of the tax period mentioned in paragraph 31(1)(a), except in the case of a claim resulting from an incorrect disclosure;

(b)in the case of a claim under paragraph 31(1) resulting from an incorrect disclosure, the end of the tax period in which the disclosure was made;

(c)in the case of a claim under paragraph 31(2), the date on which the payment was made;

(d)in the case of a claim under paragraph 31(3), the end of the quarter in which the assessment was made.

(6)A person makes an “incorrect disclosure” where—

(a)the person discloses to the tax authorities in question (whether the Commissioners or the tax authorities for the administering member State) that the person has not brought into account for a tax period an amount of UK VAT due for the period (“the disclosed amount”),

(b)the disclosure is made in a later tax period, and

(c)some or all of the disclosed amount is not in fact VAT due.

Increase or decrease in consideration for a supply [F34: cases outside Article 61 of the Implementing Regulation] U.K.

Textual Amendments

33(1)This paragraph applies where—U.K.

(a)a person makes [F35an OSS scheme return or] a non-UK return for a tax period (“the affected tax period”) relating (wholly or partly) to a UK supply, and

(b)after the [F36end of the period during which the person is entitled under Article 61 of the Implementing Regulation to amend their return] the amount of the consideration for the UK supply increases or decreases.

[F37(2)The person must, in the tax period in which the increase or decrease is accounted for in the person’s business accounts, notify the Commissioners of the adjustment needed to the figures in the OSS scheme return or non-UK return (as the case may be) because of the increase or decrease.]

(3)[F38Where the change to which a notice under sub-paragraph (2) relates is an increase in the consideration for a supply, the person must pay to the Commissioners the difference between—]

(a)the amount of VAT that was chargeable on the supply before the increase in consideration, and

(b)the amount of VAT that is chargeable in respect of the whole of the increased consideration for the supply.

(4)Where the change to which an amendment or notice under sub-paragraph (2) relates is a decrease in the consideration for a [F39supply], the amendment or notice has effect as a claim; and where a claim is made the Commissioners must repay any [F40UK] VAT paid by the person that would not have been [F40UK] VAT due from the person had the consideration for the supply always been the decreased amount.

(5)The Commissioners may by regulations specify—

(a)the latest time by which, and the form and manner in which, a claim or other notice under [F41sub-paragraph (2)] must be given;

(b)the latest time by which, and the form in which, a payment under sub-paragraph (3) must be made F42....

F43(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In this paragraph “UK supply” means a scheme supply that is treated as made in the United Kingdom.

Textual Amendments

Bad debtsU.K.

34U.K.Where a participant in a non-UK scheme—

(a)has submitted a non-UK return to the tax authorities for the administering member State, and

(b)amends the return to take account of the writing-off as a bad debt of the whole or part of the consideration for a scheme supply that is treated as made in the United Kingdom,

the amending of the return may be treated as the making of a claim to the Commissioners for the purposes of section 36(2) (bad debts: claim for refund of VAT).

Penalties for errors: disclosureU.K.

35U.K.Where a person corrects a non-UK return in a way that constitutes telling the tax authorities for the administering member State about—

(a)an inaccuracy in the return,

(b)a supply of false information, or

(c)a withholding of information,

the person is regarded as telling HMRC about that for the purposes of paragraph 9 of Schedule 24 to the Finance Act 2007.

Set-offsU.K.

36U.K.Where a participant in a non-UK scheme is liable to pay UK VAT to the tax authorities for the administering member State in accordance with the scheme, the UK VAT is regarded for the purposes of section 130(6) of the Finance Act 2008 (set-off) as payable to the Commissioners.]

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