Finance Act 2003

17 Requirement of evidence or security

(1) The Value Added Tax Act 1994 (c. 23) is amended as follows.

(2) In section 24(6)(a) (regulations about input tax etc: requirement of documentary evidence) after “documents” insert “or other information”.

(3) In paragraph 4 of Schedule 11 (power to require security and production of documents) for sub-paragraph (1) substitute—

“(1) The Commissioners may, as a condition of allowing or repaying input tax to any person, require the production of such evidence relating to VAT as they may specify.

(1A) If they think it necessary for the protection of the revenue, the Commissioners may require, as a condition of making any VAT credit, the giving of such security for the amount of the payment as appears to them appropriate.”.

(4) For sub-paragraph (2) of that paragraph substitute—

“(2) If they think it necessary for the protection of the revenue, the Commissioners may require a taxable person, as a condition of his supplying or being supplied with goods or services under a taxable supply, to give security, or further security, for the payment of any VAT that is or may become due from—

(a) the taxable person, or

(b) any person by or to whom relevant goods or services are supplied.

(3) In sub-paragraph (2) above “relevant goods or services” means goods or services supplied by or to the taxable person.

(4) Security under sub-paragraph (2) above shall be of such amount, and shall be given in such manner, as the Commissioners may determine.

(5) The powers conferred on the Commissioners by sub-paragraph (2) above are without prejudice to their powers under section 48(7).”.

(5) In section 72(11) (penalty for supplying goods in contravention of paragraph 4(2) of Schedule 11) after “supplies” insert “or is supplied with”.

(6) In section 83(l) (right of appeal against requirement of security under paragraph 4(2) of Schedule 11 etc) for “paragraph 4(2)” substitute “paragraph 4(1A) or (2)”.

(7) In section 84 (further provisions relating to appeals) after subsection (4D) insert—

“(4E) Where an appeal is brought against a requirement imposed under paragraph 4(2)(b) of Schedule 11 that a person give security, the tribunal shall allow the appeal unless the Commissioners satisfy the tribunal that—

(a) there has been an evasion of, or an attempt to evade, VAT in relation to goods or services supplied to or by that person, or

(b) it is likely, or without the requirement for security it is likely, that VAT in relation to such goods or services will be evaded.

(4F) A reference in subsection (4E) above to evading VAT includes a reference to obtaining a VAT credit that is not due or a VAT credit in excess of what is due.”.

(8) This section shall be deemed to have come into force on 10th April 2003.