Finance Act 1985

15 Failures to notify and unauthorised issue of invoices. U.K.

(1) In any case where—

(a) a person fails to comply with any of paragraphs 3, 4 and 11(2) [F1 and (3)] of Schedule 1 to the principal Act [F2 with paragraph 3 of Schedule 1A to that Act or with paragraph 3 or 8(2) of Schedule 1B to that Act] (duty to notify liability for registration or change in nature of supplies etc. by a person exempted from registration), or

[F3 (aa) a person fails to comply with a requirement of regulations under paragraph 2(2B) of Schedule 7 to the principal Act (notification of acquisition of excise duty goods or new means of transport), or]

(b) an unauthorised person issues [F4 one or more invoices] showing an amount as being tax or as including an amount attributable to tax.

he shall be liable, subject to subsections (4) and (5) below, to a penalty equal to [F5 the specified percentage] of the relevant tax or, if it is greater or the circumstances are such that there is no relevant tax, to a penalty of £50.

(2) In subsection (1)(b) above, “an unauthorised person” means anyone other than—

(a) a person registered under the principal Act; or

(b) a body corporate treated for the purposes of section 29 of that Act as a member of a group; or

(c) a person treated as a taxable person under regulations made under section 31(4) of that Act; or

(d) a person authorised to issue an invoice under regulations made under paragraph 2(6) of Schedule 7 to that Act; or

(e) a person acting on behalf of the Crown.

(3) In subsection (1) above “relevant tax” means [F6 (subject to subsections (3B) and (3C) below)],—

(a) in relation to a person’s failure to comply with paragraph 3 or paragraph 4 of Schedule 1 to the principal Act [F7 with paragraph 3 of Schedule 1A to that Act or with paragraph 3 of Schedule 1B to that Act], the tax (if any) for which he is liable for the period beginning on the date with effect from which he is, in accordance with that paragraph, required to be registered and ending on that date on which the Commissioners received notification of, or otherwise [F8 became fully aware of], his liability to be registered; and

(b) in relation to a person’s failure to comply with subparagraph (2) [F9 or (3)] of paragraph 11 of Schedule 1 to the principal Act [F7 or with sub-paragraph (2) of paragraph 8 of Schedule 1B to that Act], the tax (if any) for which, but for any exemption from registration, he would be liable for the period beginning on the date of the change or alteration referred to in that subparagraph and ending on the date on which the Commissioners received notification of, or otherwise [F10 became fully aware of], that change or alteration; and

[F11 (ba) in relation to a person’s failure to comply with a requirement of regulations under paragraph 2(2B) of Schedule 7 to the principal Act, the tax on the acquisition to which the failure relates; and]

(c) in relation to the issue of [F12 one or more such invoices as are] referred to in subsection (1)(b) above, [F13 the amount which is, or the aggregate of the amounts which are—

(i) shown on the invoice or invoices as tax, or

(ii) to be taken as representing tax].

[F14 (3A) For the purposes of subsection (1) above the specified percentage is—

(a) 10 per cent. where the relevant tax is given by paragraph (a) or (b) of subsection (3) above and the period referred to in that paragraph does not exceed nine months [F15 or where the relevant tax is given by paragraph (ba) of that subsection and the failure in question did not continue for more than three months];

(b) 20 per cent. where that tax is [F16 given by paragraph (a) or (b) of subsection (3) above] and the period soreferred to exceeds nine months but does not exceed eighteen months [F15 or where that tax is given by paragraph (ba) of that subsection and the failure in question continued for more than three months but did not continue for more than six months]; and

(c) 30 per cent. in any other case.]

[F17 (3B) Where—

(a) the amount of tax which (apart from this subsection) would be treated for the purposes of subsection (1) above as the relevant tax in relation to a failure mentioned in subsection (3)(a) above includes tax on an acquisition of goods from another member State; and

(b) the Commissioners are satisfied that value added tax has been paid under the law of another member State on the supply in pursuance of which those goods were acquired,

then, in the determination of the amount of the relevant tax in relation to that failure, an allowance shall be made for the value added tax paid under the law of that member State; and the amount of the allowance shall not exceed the amount of tax due on the acquisition but shall otherwise be equal to the amount of value added tax which the Commissioners are satisfied has been paid on that supply under the law of that member State.

(3C) Where—

(a) the amount of tax which (apart from this subsection) would be treated for the purposes of subsection (1) above as the relevant tax in relation to a failure mentioned in subsection (3)(a) above includes tax chargeable by virtue of section 6(2B) of the principal Act on any supply; and

(b) the Commissioners are satisfied that value added tax has been paid under the law of another member State on that supply,

then, in the determination of the amount of the relevant tax in relation to that failure, an allowance shall be made for the tax paid under the law of the other member State; and the amount of the allowance shall not exceed the amount of tax chargeable by virtue of section 6(2B) on that supply but shall otherwise be equal to the amount of tax which the Commissioners are satisfied has been paid on that supply under the law of that other member State.]

[F18 (3D) This section shall have effect in relation to any invoice which—

(a) for the purposes of any provision made under subsection (3) of section 37B of the principal Act shows an amount as included in the consideration for any supply; and

(b) either—

(i) fails to comply with the requirements of any regulations under that section; or

(ii) is issued by a person who is not for the time being authorised to do so for the purposes of that section,

as if the person issuing the invoice were an unauthorised person and that amount were shown on the invoice as an amount attributable to tax.]

(4) Conduct falling within subsection (1) above shall not give rise to liability to a penalty under this section if the person concerned satisfies the Commissioners or, on appeal, a value added tax tribunal that there is a reasonable excuse for his conduct.

(5) Where, by reason of conduct falling within subsection (1) above,—

(a) a person is convicted of an offence (whether under the principal Act or otherwise), or

(b) a person is assessed to a penalty under section 13 above,

that conduct shall not also give rise to liability to a penalty under this section.

(6) If it appears to the Treasury that there has been a change in the value of money since the passing of this Act or, as the case may be, the last occasion when the power conferred by this subsection was exercised, they may by order made by statutory instrument substitute for the sum for the time being specified in subsection (1) above such other sum as appears to them to be justified by the change.

(7) An order under subsection (6) above shall not apply in relation to a failure to comply which ended on or before the date on which the order comes into force.

(8) A statutory instrument under subsection (6) above shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.

Textual Amendments

F1 Words inserted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(1)(a)

F2 Words in s. 15(1)(a) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(1)(a); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.

F3 S. 15(1)(aa) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(1)(b); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.

F4 Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(1)(b)(6)

F5 Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(1)(c)(6)

F6 Words in s. 15(3) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(2)(a); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.

F7 Words in s. 15(3)(a)(b) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(2)(b)(c); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3 Sch.

F8 Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(2)(a)

F9 Words inserted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(2)(b)

F10 Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(2)(b)

F11 S. 15(3)(ba) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch.3 Pt. II para. 80(2)(d); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3 Sch.

F12 Words substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(2)(c)

F13 Words and s. 15(3)(c)(i)(ii) substituted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(2)(c)

F14 S. 15(3A) inserted by Finance Act 1988 (c. 39, SIF 40:2), s. 18(3)

F15 Words in s. 15(3A)(a)(b) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(3)(a)(b); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3 Sch.

F16 Words in s. 15(3A)(b) substituted (1.12.1992 for certain purposes and 1.1.1993 insofar as not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(3)(b); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3 Sch.

F17 S. 15(3B)(3C) inserted (1.12.1992 for certain purposes and 1.1.1993 insofar as not not already in force) by Finance (No. 2) Act 1992 (c. 48), s. 14(2), Sch. 3 Pt. II para. 80(4); S.I. 1992/2979, art. 4, Sch. Pt. II and S.I. 1992/3261, art. 3, Sch.

F18 S. 15(3D) inserted (1.1.1993) by Finance (No. 2) Act 1992 (c. 48), s. 16(5); S.I. 1992/3261, art. 3,Sch.