Value Added Tax Act 1994 (c. 23)

Part IV U.K. Administration, collection and enforcement

[F1 Liability for unpaid VAT of another U.K.

Textual Amendments

F1 S. 77A and cross-heading inserted (retrospective to 10.4.2003) by Finance Act 2003 (c. 14), s. 18(1)(4)

77A Joint and several liability of traders in supply chain where tax unpaid U.K.

(1) This section applies to goods [F2 which fall within any one or more] of the following descriptions—

[F3 (a) any equipment made or adapted for use as a telephone and any other equipment made or adapted for use in connection with telephones or telecommunication;

(b) any equipment made or adapted for use as a computer and any other equipment made or adapted for use in connection with computers or computer systems (including, in particular, positional determination devices for use with satellite navigation systems);

(c) any other electronic equipment made or adapted for use by individuals for the purposes of leisure, amusement or entertainment and any other equipment made or adapted for use in connection with any such electronic equipment;

and in this subsection “other equipment” includes parts, accessories and software.]

(2) Where—

(a) a taxable supply of goods to which this section applies has been made to a taxable person, and

(b) at the time of the supply the person knew or had reasonable grounds to suspect that some or all of the VAT payable in respect of that supply, or on any previous or subsequent supply of those goods, would go unpaid,

the Commissioners may serve on him a notice specifying the amount of the VAT so payable that is unpaid, and stating the effect of the notice.

(3) The effect of a notice under this section is that—

(a) the person served with the notice, and

(b) the person liable, apart from this section, for the amount specified in the notice,

are jointly and severally liable to the Commissioners for that amount.

(4) For the purposes of subsection (2) above the amount of VAT that is payable in respect of a supply is the lesser of—

(a) the amount chargeable on the supply, and

(b) the amount shown as due on the supplier’s return for the prescribed accounting period in question (if he has made one) together with any amount assessed as due from him for that period (subject to any appeal by him).

(5) The reference in subsection (4)(b) above to assessing an amount as due from a person includes a reference to the case where, because it is impracticable to do so, the amount is not notified to him.

(6) For the purposes of subsection (2) above, a person shall be presumed to have reasonable grounds for suspecting matters to be as mentioned in paragraph (b) of that subsection if the price payable by him for the goods in question—

(a) was less than the lowest price that might reasonably be expected to be payable for them on the open market, or

(b) was less than the price payable on any previous supply of those goods.

(7) The presumption provided for by subsection (6) above is rebuttable on proof that the low price payable for the goods was due to circumstances unconnected with failure to pay VAT.

(8) Subsection (6) above is without prejudice to any other way of establishing reasonable grounds for suspicion.

[F4 (9) The Treasury may by order amend subsection (1) above.

(9A) The Treasury may by order amend this section in order to extend or otherwise alter the circumstances in which a person shall be presumed to have reasonable grounds for suspecting matters to be as mentioned in subsection (2)(b) above.

(9B) Any order under this section may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.]

(10) For the purposes of this section—

(a) “goods” includes services;

(b) an amount of VAT counts as unpaid only to the extent that it exceeds the amount of any refund due.]

Textual Amendments

F2 Words in s. 77A(1) substituted (1.5.2007) by The Value Added Tax (Amendment of section 77A of the Value Added Tax Act 1994) Order 2007 (S.I. 2007/939), arts. 1, 2(a)

F3 S. 77A(1)(a)-(c) substituted for s. 77A(1)(a)(b) (1.5.2007) by The Value Added Tax (Amendment of section 77A of the Value Added Tax Act 1994) Order 2007 (S.I. 2007/939), arts. 1, 2(b)

F4 S. 77A(9)-(9B) substituted for s. 77A(9) (19.7.2007) by Finance Act 2007 (c. 11), s. 98(1)

[F5 77B Joint and several liability: operators of online marketplaces U.K.

(1) This section applies where a person (“P”) who is not UK-established—

(a) makes taxable supplies of goods through an online marketplace, and

(b) fails to comply with any requirement imposed on P by or under this Act (whether or not it relates to those supplies).

(2) The Commissioners may give the person who is the operator of the online marketplace (“the operator”) a notice—

(a) stating that, unless the operator secures the result mentioned in subsection (3), subsection (5) will apply, and

(b) explaining the effect of subsection (5).

(3) The result referred to in subsection (2)(a) is that P does not offer goods for sale through the online marketplace at any time between—

(a) the end of such period as may be specified in the notice, and

(b) the notice ceasing to have effect.

(4) If the operator does not secure the result mentioned in subsection (3), subsection (5) applies.

(5) The operator is jointly and severally liable to the Commissioners for the amount of VAT payable by P in respect of all taxable supplies of goods made by P through the online marketplace in the period for which the notice has effect.

(6) A notice under subsection (2) (“the liability notice”) has effect for the period beginning with the day after the day on which it is given, and ending—

(a) with the day specified in a notice given by the Commissioners under subsection (7), or

(b) in accordance with subsection (8).

(7) The Commissioners may at any time give the operator a notice stating that the period for which the liability notice has effect ends with the day specified in the notice.

(8) If the person to whom the liability notice is given ceases to be the operator of the online marketplace, the liability notice ceases to have effect at the end of—

(a) the day on which the person ceases to be the operator, or

(b) (if later) the day on which the person notifies the Commissioners that the person is no longer the operator.

(9) In this section—

• “online marketplace” means a website, or any other means by which information is made available over the internet, through which persons other than the operator are able to offer goods for sale (whether or not the operator also does so);

• “operator”, in relation to an online marketplace, means the person who controls access to, and the contents of, the online marketplace.

(10) For the purposes of this section a person is “UK-established” if the person is established in the United Kingdom within the meaning of Article 10 of Implementing Regulation (EU) No 282/2011.

(11) The Treasury may by regulations provide that supplies made or goods offered for sale in circumstances specified in the regulations are, or are not, to be treated for the purposes of this section as having been made or offered through an online marketplace.

(12) The Treasury may by regulations amend this section so as to alter the meaning of—

• “online marketplace”,

• “operator”, and

• “UK-established”.

Textual Amendments

F5 Ss. 77B-77D inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 124(2)

77C Joint and several liability under section 77B: assessments U.K.

(1) The Commissioners may assess the amount of VAT due from the operator of an online marketplace by virtue of section 77B to the best of their judgment and notify it to the operator.

(2) Subject to subsections (3) to (6), an assessment may be made for such period or periods as the Commissioners consider appropriate.

(3) An assessment for any month may not be made after the end of—

(a) 2 years after the end of that month, or

(b) (if later) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of an assessment for that month, comes to their knowledge.

(4) Subsection (5) applies if, after the Commissioners have made an assessment for a period, evidence of facts sufficient in the opinion of the Commissioners to justify the making of a further assessment for that period comes to their knowledge.

(5) The Commissioners may, no later than one year after that evidence comes to their knowledge, make a further assessment for that period (subject to subsection (6)).

(6) An assessment or further assessment for a month may not be made more than 4 years after the end of the month.

(7) An amount which has been assessed and notified to a person under this section is deemed to be an amount of VAT due from the person and may be recovered accordingly (unless, or except to the extent that, the assessment is subsequently withdrawn or reduced).

(8) Subsection (7) is subject to the provisions of this Act as to appeals.

(9) Expressions used in this section and in section 77B have the same meaning in this section as in section 77B.

Textual Amendments

F5 Ss. 77B-77D inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 124(2)

77D Joint and several liability under section 77B: interest U.K.

(1) If an amount assessed under section 77C is not paid before the end of the period of 30 days beginning with the day on which notice of the assessment is given, the amount assessed carries interest from the day on which the notice of assessment is given until payment.

(2) Interest under this section is payable at the rate applicable under section 197 of the Finance Act 1996.

(3) Where the operator of an online marketplace is liable for interest under this section the Commissioners may assess the amount due and notify it to the operator.

(4) A notice of assessment under this section must specify a date (not later than the date of the notice) to which the interest is calculated.

(5) A further assessment or assessments may be made under this section in respect of any interest accrued after that date.

(6) An amount of interest assessed and notified to the operator of an online marketplace under this section is recoverable as if it were VAT due from the operator (unless, or except to the extent that, the assessment is withdrawn or reduced).

(7) Interest under this section is to be paid without any deduction of income tax.

(8) Expressions used in this section and in section 77B have the same meaning in this section as in section 77B.]

Textual Amendments

F5 Ss. 77B-77D inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 124(2)