Value Added Tax Act 1994

• (ii) anything done for purposes connected with acting on his principal’s behalf,

as if the obligations and liabilities imposed on his principal were imposed jointly and severally on the VAT representative and his principal.

• (4) A VAT representative shall not be liable by virtue of subsection (3) above himself to be registered under this Act, but regulations made by the Commissioners may—

• (a) require the registration of the names of VAT representatives against the names of their principals in any register kept for the purposes of this Act; ...

• (b) make it the duty of a VAT representative, for the purposes of registration, to notify the Commissioners, within such period as may be prescribed, that his appointment has taken effect or has ceased to have effect.

• (c) give the Commissioners power to refuse to register a person as a VAT representative, or to cancel a person's registration as a VAT representative, in such circumstances as may be specified in the regulations.

• (4A) Regulations under subsection (4) may require a notification under that subsection to be made in such form and manner, and to contain such particulars, as may be specified in the regulations or by the Commissioners in accordance with the regulations.

• (5) A VAT representative shall not by virtue of subsection (3) above be guilty of any offence except in so far as—

• (a) the VAT representative has consented to, or connived in, the commission of the offence by his principal;

• (b) the commission of the offence by his principal is attributable to any neglect on the part of the VAT representative; or

• (c) the offence consists in a contravention by the VAT representative of an obligation which, by virtue of that subsection, is imposed both on the VAT representative and on his principal.

• (6) The Commissioners may by regulations make provision as to the manner and circumstances in which a person is to be appointed, or is to be treated as having ceased to be, another’s VAT representative; and regulations under this subsection may include such provision as the Commissioners think fit for the purposes of subsection (4) above with respect to the making or deletion of entries in any register.

• (7) The Commissioners may require a person in relation to whom the conditions specified in paragraphs (a), (b) and (c) of subsection (1) are satisfied to provide such security, or further security, as they may think appropriate for the payment of any VAT which is or may become due from him.

• (7A) A sum required by way of security under subsection (7) above shall be deemed for the purposes of—

• (a) section 51 of the Finance Act 1997 (enforcement by taking control of goods or, in Northern Ireland, by distress) and any regulations under that section, and

• (b) section 52 of that Act (enforcement by diligence),

to be recoverable as if it were VAT due from the person who is required to provide it.

• (7B) A direction under subsection (1ZA)—

• (a) may specify a time by which it (or any part of it) must be complied with;

• (b) may be varied;

• (c) continues to have effect (subject to any variation) until it is withdrawn or the conditions specified in subsection (1) are no longer satisfied.

• (7C) A requirement under subsection (7)—

• (a) may specify a time by which it (or any part of it) must be complied with;

• (b) may be varied;

• (c) continues to have effect (subject to any variation) until it is withdrawn.

• (8) For the purposes of this Act a person shall not be treated as having been directed to appoint a VAT representative, or as having been required to provide security under subsection (7) above, unless the Commissioners have either—

• (a) served notice of the direction or requirement on him; or

• (b) taken all such other steps as appear to them to be reasonable for bringing the direction or requirement to his attention.

• (8A) For the purposes of subsections (1ZA) and (2)—

• (a) a person is UK-established if the person is established, or has a fixed establishment, in the United Kingdom, and

• (b) an individual is also UK-established if the person's usual place of residence or permanent address is in the United Kingdom.

• (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfers of going concerns.

49

• (1) Where a business , or part of a business, carried on by a taxable person is transferred to another person as a going concern, then—

• (a) for the purpose of determining whether the transferee is liable to be registered under this Act he shall be treated as having carried on the business or part of the business before as well as after the transfer and supplies by the transferor shall be treated accordingly; ...

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Without prejudice to subsection (1) above, the Commissioners may by regulations make provision for securing continuity in the application of this Act in cases where a business , or part of a business, carried on by a taxable person is transferred to another person as a going concern and the transferee is registered under this Act in substitution for the transferor.

• (2A) Regulations under subsection (2) above may, in particular, provide for the duties under this Act of the transferor to preserve records relating to the business or part of the business for any period after the transfer to become duties of the transferee unless the Commissioners, at the request of the transferor, otherwise direct.

• (3) Regulations under subsection (2) above may, in particular, provide—

• (a) for liabilities and duties under this Act (excluding sections 59 to 70) of the transferor (other than the duties mentioned in subsection (2A) above) to become, to such extent as may be provided by the regulations, liabilities and duties of the transferee; and

• (b) for any right of either of them to repayment or credit in respect of VAT to be satisfied by making a repayment or allowing a credit to the other;

but no such provision as is mentioned in paragraph (a) or (b) of this subsection shall have effect in relation to any transferor and transferee unless an application in that behalf has been made by them under the regulations.

• (4) Subsection (5) below applies where—

• (a) a business, or part of a business, carried on by a taxable person is transferred to another person as a going concern, and

• (b) the transferor continues to be required under this Act to preserve for any period after the transfer any records relating to the business or part of the business.

• (5) So far as is necessary for the purpose of complying with the transferee's duties under this Act, the transferee (“E”) may require the transferor—

• (a) to give to E, within such time and in such form as E may reasonably require, such information contained in the records as E may reasonably specify,

• (b) to give to E, within such time and in such form as E may reasonably require, such copies of documents forming part of the records as E may reasonably specify, and

• (c) to make the records available for E's inspection at such time and place as E may reasonably require (and permit E to take copies of, or make extracts from, them).

• (6) Where a business, or part of a business, carried on by a taxable person is transferred to another person as a going concern, the Commissioners may disclose to the transferee any information relating to the business when it was carried on by the transferor for the purpose of enabling the transferee to comply with the transferee's duties under this Act.

Terminal markets.

50

• (1) The Treasury may by order make provision for modifying the provisions of this Act in their application to dealings on terminal markets and such persons involved in such dealings as may be specified in the order, subject to such conditions as may be so specified.

• (2) Without prejudice to the generality of subsection (1) above, an order under this section may include provision—

• (a) for zero-rating the supply of any goods or services or for treating the supply of any goods or services as exempt;

• (b) for the registration under this Act of any body of persons representing persons involved in dealing on a terminal market and for disregarding such dealings by persons so represented in determining liability to be registered under this Act, and for disregarding such dealings between persons so represented for all the purposes of this Act;

• (c) for refunding, to such persons as may be specified by or under the order, input tax attributable to such dealings on a terminal market as may be so specified,

and may contain such incidental and supplementary provisions as appear to the Treasury to be necessary or expedient.

• (3) An order under this section may make different provision for different purposes, including different provision in relation to—

• (a) different terminal markets;

• (b) different persons;

• (c) different commodities, goods or services.

Margin schemes.

50A

• (1) The Treasury may by order provide, in relation to any such description of supplies to which this section applies as may be specified in the order, for a taxable person to be entitled to opt that, where he makes supplies of that description, VAT is to be charged by reference to the profit margin on the supplies, instead of by reference to their value.

• (2) This section applies to the following supplies, that is to say—

• (a) supplies of works of art, antiques or collectors’ items;

• (b) supplies of motor vehicles;

• (c) supplies of second-hand goods; and

• (d) any supply of goods through a person who acts as an agent, but in his own name, in relation to the supply.

• (3) An option for the purposes of an order under this section shall be exercisable, and may be withdrawn, in such manner as may be required by such an order.

• (4) Subject to subsection (7) below, the profit margin on a supply to which this section applies shall be taken, for the purposes of an order under this section, to be equal to the amount (if any) by which the price at which the person making the supply obtained the goods in question is exceeded by the price at which he supplies them.

• (5) For the purposes of this section the price at which a person has obtained any goods and the price at which he supplies them shall each be calculated in accordance with the provisions contained in an order under this section; and such an order may, in particular, make provision stipulating the extent to which any VAT charged on a supply... or importation of any goods is to be treated as included in the price at which those goods have been obtained or are supplied.

• (6) An order under this section may provide that the consideration for any services supplied in connection with a supply of goods by a person who acts as an agent, but in his own name, in relation to the supply of the goods is to be treated for the purposes of any such order as an amount to be taken into account in computing the profit margin on the supply of the goods, instead of being separately chargeable to VAT as comprised in the value of the services supplied.

• (7) An order under this section may provide for the total profit margin on all the goods of a particular description supplied by a person in any prescribed accounting period to be calculated by—

• (a) aggregating all the prices at which that person obtained goods of that description in that period together with any amount carried forward to that period in pursuance of paragraph (d) below;

• (b) aggregating all the prices at which he supplies goods of that description in that period;

• (c) treating the total profit margin on goods supplied in that period as being equal to the amount (if any) by which, for that period, the aggregate calculated in pursuance of paragraph (a) above is exceeded by the aggregate calculated in pursuance of paragraph (b) above; and

• (d) treating any amount by which, for that period, the aggregate calculated in pursuance of paragraph (b) above is exceeded by the aggregate calculated in pursuance of paragraph (a) above as an amount to be carried forward to the following prescribed accounting period so as to be included, for the period to which it is carried forward, in any aggregate falling to be calculated in pursuance of paragraph (a) above.

• (8) An order under this section may—

• (a) make different provision for different cases; and

• (b) make provisions of the order subject to such general or special directions as may, in accordance with the order, be given by the Commissioners with respect to any matter to which the order relates.

Margin schemes and export or removal of goods

50B

• (1) The Treasury may by order provide that, on making a claim, a person is entitled to a VAT-related payment in respect of relevant supplies or of a description of relevant supply specified in the order.

• (2) “Relevant supply”, in relation to a person making a claim, means a supply of goods to the person where—

• (a) the person took possession of the goods in Great Britain or the Isle of Man in the course of carrying on a business,

• (b) the goods were then removed to Northern Ireland or exported,

• (c) at the time of the removal or export (“the relevant time”), the person intended to resell the goods outside Great Britain and the Isle of Man in the course of carrying on the business, and

• (d) if the circumstances of, and following, the supply to the person had been altered as described in subsection (3), the person would have been entitled to exercise an option under an order made under section 50A in respect of the resale of the goods.

• (3) The alterations mentioned in subsection (2)(d) are—

• (a) that (if it was not in fact so) the person was a taxable person,

• (b) that the goods were not removed to Northern Ireland or exported (and VAT was charged on the supply of the goods to the person on that basis), and

• (c) that the person resold the goods in Great Britain at the relevant time in the course of carrying on the business.

• (4) “VAT-related payment”, in respect of a supply of goods, means a payment of an amount equal to so much of the consideration for the supply as would have constituted VAT if—

• (a) the supply had taken place at the relevant time, and

• (b) VAT had been chargeable on the value of the supply,

subject to any provision made in reliance on subsection (5).

• (5) An order under this section may make provision for the amount of a VAT-related payment to be less than the amount described in subsection (4).

• (6) An order under this section may, among other things—

• (a) make entitlement to a VAT-related payment subject to conditions;

• (b) make provision about the making of claims under the order;

• (c) make provision for claims to be treated as if they were returns under this Act in respect of a particular period;

• (d) make provision about the calculation of VAT-related payments, including provision about the calculation of the consideration for, or value of, a supply;

• (e) make provision about how VAT-related payments are to be paid;

• (f) make provision for VAT-related payments to be treated as if they were repayments of input tax;

• (g) make provision requiring claims and payments to be made through agents in the United Kingdom;

• (h) make provision for agents dealing with claims and payments under the order to be treated under this Act as if they were taxable persons;

• (i) make provision for and in connection with the payment of interest to or by the Commissioners, including provision about interest wrongly paid.

• (7) An order under this section may, among other things—

• (a) confer power on the Commissioners to make provision in a direction or notice;

• (b) make provision, or enable the Commissioners to make provision, generally or for particular purposes;

• (c) make provision applying a provision of or made under this Act or another enactment, with or without modifications, including provision relating to penalties and offences;

• (d) make different provision for different purposes, including different provision in relation to persons carrying on business in different places or in relation to the removal or export of goods to different places;

• (e) make consequential, incidental, supplementary, transitional, transitory or saving provision.

• (8) The provision that may be made under subsection (7)(e) includes provision amending an enactment or subordinate legislation.

• (9) References in this section to carrying on a business are to doing so in the United Kingdom or elsewhere.

Buildings and land.

51

• (1) Schedule 10 shall have effect with respect to buildings and land.

• (2) The Treasury may by order amend Schedule 10.

Face-value vouchers issued before 1 January 2019

51B

• (1) Schedule 10A shall have effect with respect to face-value vouchers.

• (2) Schedule 10A does not have effect with respect to a face value voucher (within the meaning of that Schedule) issued on or after 1 January 2019.

Vouchers issued on or after 1 January 2019

51C

• (1) Schedule 10B makes provision about the VAT treatment of vouchers.

• (2) Schedule 10B has effect with respect to a voucher (within the meaning of that Schedule) issued on or after 1 January 2019.

Postage stamps issued on or after 1 January 2019

51D

• (1) The issue of a postage stamp, and any subsequent transfer of it, is a supply of services for the purposes of this Act.

• (2) The consideration for the issue or subsequent transfer of a postage stamp is to be disregarded for the purposes of this Act, except to the extent (if any) that it exceeds the face value of the stamp.

• (3) The “face value” of the stamp is the amount stated on or recorded in the stamp or the terms and conditions governing its use.

• (4) This section has effect with respect to postage stamps issued on or after 1 January 2019.

Trading stamp schemes.

52

The Commissioners may by regulations modify section 19 and Schedule 6 for the purpose of providing (in place of the provision for the time being contained in that section and Schedule) for the manner of determining for the purposes of this Act the value of—

• (a) a supply of goods, ...

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

in a case where the goods are supplied ... under a trading stamp scheme (within the meaning of the Trading Stamps Act 1964 or the Trading Stamps Act (Northern Ireland) 1965) ....

Tour operators.

53

• (1) The Treasury may by order modify the application of this Act in relation to supplies of goods or services by tour operators or in relation to such of those supplies as may be determined by or under the order.

• (2) Without prejudice to the generality of subsection (1) above, an order under this section may make provision—

• (a) for two or more supplies of goods or services by a tour operator to be treated as a single supply of services;

• (b) for the value of that supply to be ascertained, in such manner as may be determined by or under the order, by reference to the difference between sums paid or payable to and sums paid or payable by the tour operator;

• (c) for account to be taken, in determining the VAT chargeable on that supply, of the different rates of VAT that would have been applicable apart from this section;

• (d) excluding any person from the application of section 43;

• (e) as to the time when a supply is to be treated as taking place.

• (3) In this section “tour operator” includes a travel agent acting as principal and any other person providing for the benefit of travellers services of any kind commonly provided by tour operators or travel agents.

• (4) Section 97(3) shall not apply to an order under this section, notwithstanding that it makes provision for excluding any VAT from credit under section 25.

Farmers etc.

54

• (1) The Commissioners may, in accordance with such provision as may be contained in regulations made by them, certify for the purposes of this section any person who satisfies them—

• (a) that he is carrying on a business involving one or more designated activities;

• (b) that he is of such a description and has complied with such requirements as may be prescribed; and

• (c) where an earlier certification of that person has been cancelled, that more than the prescribed period has elapsed since the cancellation or that such other conditions as may be prescribed are satisfied.

• (2) Where a person is for the time being certified under this section, then (whether or not that person is a taxable person) so much of any supply by him of any goods or services as, in accordance with provision contained in regulations, is allocated to the relevant part of his business shall be disregarded for the purpose of determining whether he is, has become or has ceased to be liable or entitled to be registered under Schedule 1 or is, has become or has ceased to be liable to be registered under Schedule 1A.

• (3) The Commissioners may by regulations provide for an amount included in the consideration for any taxable supply which is made—

• (a) in the course or furtherance of the relevant part of his business by a person who is for the time being certified under this section;

• (b) at a time when that person is not a taxable person; and

• (c) to a taxable person,

to be treated, for the purpose of determining the entitlement of the person supplied to credit under sections 25 and 26, as VAT on a supply to that person.

• (4) The amount which, for the purposes of any provision made under subsection (3) above, may be included in the consideration for any supply shall be an amount equal to such percentage as the Treasury may by order specify of the sum which, with the addition of that amount, is equal to the consideration for the supply.

• (5) The Commissioners’ power by regulations under section 39 to provide for the repayment to persons to whom that section applies of VAT which would be input tax of theirs if they were taxable persons in the United Kingdom includes power to provide for the payment to persons to whom that section applies of sums equal to the amounts which, if they were taxable persons in the United Kingdom, would be input tax of theirs by virtue of regulations under this section; and references in that section, or in any other enactment, to a repayment of VAT shall be construed accordingly.

• (6) Regulations under this section may provide—

• (a) for ... an application for certification under this section, or for the cancellation of any such certification, to be made in the form and manner specified in the regulations or by the Commissioners in accordance with the regulations;

• (b) for the cases and manner in which the Commissioners may cancel a person’s certification;

• (c) for entitlement to a credit such as is mentioned in subsection (3) above to depend on the issue of an invoice containing such particulars as may be prescribed, or as may be notified by the Commissioners in accordance with provision contained in regulations; and

• (d) for the imposition on certified persons of obligations with respect to the keeping, preservation and production of such records as may be prescribed and of obligations to comply with such requirements with respect to any of those matters as may be so notified;

and regulations made by virtue of paragraph (b) above may confer on the Commissioners power, if they think fit, to refuse to cancel a person’s certification, and to refuse to give effect to any entitlement of that person to be registered, until the end of such period after the grant of certification as may be prescribed.

• (7) In this section references, in relation to any person, to the relevant part of his business are references—

• (a) where the whole of his business relates to the carrying on of one or more designated activities, to that business; and

• (b) in any other case, to so much of his business as does so relate.

• (8) In this section “designated activities” means activities relating to farming, fisheries or forestry which are designated in an order made by the Treasury.

Customers to account for tax on supplies of gold etc.

55

• (1) Where any person makes a supply of gold to another person and that supply is a taxable supply but not a zero rated supply, the supply shall be treated for purposes of Schedules 1 and 1A —

• (a) as a taxable supply of that other person (as well as a taxable supply of the person who makes it); and

• (b) in so far as that other person is supplied in connection with the carrying on by him of any business, as a supply made by him in the course or furtherance of that business;

but nothing in paragraph (b) above shall require any supply to be disregarded for the purposes of Schedule 1 on the grounds that it is a supply of capital assets of that other person’s business.

• (2) Where a taxable person makes a supply of gold to a person who—

• (a) is himself a taxable person at the time when the supply is made; and

• (b) is supplied in connection with the carrying on by him of any business,

it shall be for the person supplied, on the supplier’s behalf, to account for and pay tax on the supply, and not for the supplier.

• (3) So much of this Act and of any other enactment or any subordinate legislation as has effect for the purposes of, or in connection with, the enforcement of any obligation to account for and pay VAT shall apply for the purposes of this section in relation to any person who is required under subsection (2) above to account for and pay any VAT as if that VAT were VAT on a supply made by him.

• (4) Section 6(4) to (10) shall not apply for determining when any supply of gold is to be treated as taking place.

• (5) References in this section to a supply of gold are references to—

• (a) any supply of goods consisting in fine gold, in gold grain of any purity or in gold coins of any purity; or. . .

• (b) any supply of goods containing gold where the consideration for the supply (apart from any VAT) is, or is equivalent to, an amount which does not exceed, or exceeds by no more than a negligible amount, the open market value of the gold contained in the goods ; or.

• (c) any supply of services consisting in the application to another person’s goods of a treatment or process which produces goods a supply of which would fall within paragraph (a) above.

• (6) The Treasury may by order provide for this section to apply, as it applies to the supplies specified in subsection (5) above, to such other supplies of—

• (a) goods consisting in or containing any precious or semi-precious metal or stones; or

• (b) services relating to, or to anything containing, any precious or semi-precious metal or stones,

as may be specified or described in the order.

Customers to account for tax on supplies of goods or services of a kind used in missing trader ... fraud

55A

• (1) Subsection (3) applies if—

• (a) a taxable (but not a zero-rated) supply of goods or services (“the relevant supply”) is made to a person (“the recipient”),

• (b) the relevant supply is of goods or services to which this section applies (see subsection (9)),

• (c) the relevant supply is not an excepted supply (see subsection (10)), and

• (d) the total value of the relevant supply, and of corresponding supplies made to the recipient in the month in which the relevant supply is made, exceeds £1,000 (“the disregarded amount”).

• (2) For this purpose a “corresponding supply” means a taxable (but not a zero-rated) supply of goods or services which—

• (a) is a supply of goods or services to which this section applies, and

• (b) is not an excepted supply.

• (3) The relevant supply, and the corresponding supplies made to the recipient in the month in which the relevant supply is made, are to be treated for the purposes of Schedules 1 and 1A—

• (a) as taxable supplies of the recipient (as well as taxable supplies of the person making them), and

• (b) in so far as the recipient is supplied in connection with the carrying on by him of any business, as supplies made by him in the course or furtherance of that business,

but the relevant supply, and those corresponding supplies, are to be so treated only in so far as their total value exceeds the disregarded amount.

• (4) Nothing in subsection (3)(b) requires any supply to be disregarded for the purposes of Schedule 1 on the grounds that it is a supply of capital assets of the recipient's business.

• (5) For the purposes of subsections (1) and (3), the value of a supply is determined on the basis that no VAT is chargeable on the supply.

• (6) If—

• (a) a taxable person makes a supply of goods or services to a person (“the recipient”) at any time,

• (b) the supply is of goods or services to which this section applies and is not an excepted supply, and

• (c) the recipient is a taxable person at that time and is supplied in connection with the carrying on by him of any business,

it is for the recipient, on the supplier's behalf, to account for and pay tax on the supply and not for the supplier.

• (7) The relevant enforcement provisions apply for the purposes of this section, in relation to any person required under subsection (6) to account for and pay any VAT, as if that VAT were VAT on a supply made by him.

• (8) For this purpose “the relevant enforcement provisions” means so much of—

• (a) this Act and any other enactment, and

• (b) any subordinate legislation,

as has effect for the purposes of, or in connection with the enforcement of, any obligation to account for and pay VAT.

• (9) For the purposes of this section, goodsor services are goods or servicesto which this section applies if they are of a description specified in an order made by the Treasury.

• (9A) An order made under subsection (9) may modify the application of subsection (3) in relation to any description of goods or services specified in the order.

• (10) For the purposes of this section, an “excepted supply” means a supply which is of a description specified in, or determined in accordance with, provision contained in an order made by the Treasury.

• (11) Any order made under subsection (10) may describe a supply of goods or services by reference to—

• (a) the use which has been made of the goods or services, or

• (b) other matters unrelated to the characteristics of the goods or services themselves.

• (12) The Treasury may by order substitute for the sum for the time being specified in subsection (1)(d) such greater sum as they think fit.

• (13) The Treasury may by order make such amendments of any provision of this Act as they consider necessary or expedient for the purposes of this section or in connection with this section.

An order under this subsection may confer power on the Commissioners to make regulations or exercise any other function, but no order may be made under this subsection on or after 22nd March 2009.

• (14) Any order made under this section (other than one under subsection (12)) may—

• (a) make different provision for different cases, and

• (b) contain supplementary, incidental, consequential or transitional provisions.

Deposit schemes: designation

55B

• (1) In sections 55C and 55D “a designated deposit scheme” means a deposit scheme which is designated, for the purposes of this section, by regulations made by the Commissioners.

• (2) A “deposit scheme” means a scheme which is established—

• (a) by regulations under Schedule 8 to the Environment Act 2021, or

• (b) by or under any other enactment that makes similar provision for a returnable deposit to be paid in relation to goods.

• (3) In subsection (2)(b), the reference to an “enactment” includes a reference to an enactment comprised in, or in an instrument made under—

• (a) an Act of the Scottish Parliament,

• (b) a Measure or Act of Senedd Cymru, or

• (c) Northern Ireland legislation.

• (4) Section 97(5) (statutory instruments: procedure) does not apply to a statutory instrument containing only regulations under subsection (1).

Deposit schemes: value of supply

55C

• (1) This section applies if—

• (a) a taxable person makes a taxable (but not a zero-rated) supply of goods, and

• (b) a deposit amount is payable in relation to the goods supplied.

• (2) For the purposes of this section and section 55D, a “deposit amount” in relation to goods is an amount that, in accordance with the provisions of a designated deposit scheme—

• (a) is added to the price payable for the goods, and

• (b) must be repaid by a person, if the conditions for repayment under the scheme are met.

• (3) The deposit amount is to be disregarded in determining the amount of the consideration for the purposes of calculating the value of the supply under this Act.

Deposit schemes: liability to account for VAT on deposit amounts

55D

• (1) For the purposes of this section, a person makes a “relevant deposit scheme supply” if—

• (a) the person makes the first supply of goods in relation to which a deposit amount is payable (whether or not another person makes a subsequent supply of those goods in relation to which a deposit amount is payable), and

• (b) that supply is a taxable (but not a zero-rated) supply.

• (2) A person who makes relevant deposit scheme supplies is liable to account for and pay the VAT in respect of the deposit amount that, on the applicable assumption, would have been charged in relation to the proportion of the supplies that is determined, in accordance with provision made by or under regulations under subsection (4), as being attributable to goods in respect of which no deposit amount is repaid.

• (3) The applicable assumption is that, in the case of those goods, section 55C(3) is ignored and the deposit amount and the price payable for the goods are regarded instead as indistinguishable parts of the consideration for the supply of the goods.

• (4) The Commissioners may by regulations make provision about accounting for VAT in relation to designated deposit schemes including, in particular, provision—

• (a) for the making of financial adjustments in connection with the liability to account for and pay VAT under subsection (2);

• (b) specifying the methods for calculating those adjustments;

• (c) specifying the methods for determining or estimating the proportion of supplies in respect of which deposit amounts are not repaid;

• (d) about the manner in which, and the period within which, adjustments are to be made (including adjustments for the correction of errors);

• (e) specifying the conditions subject to which adjustments are to be made;

• (f) conferring power on the Commissioners to make provision for the purposes of paragraphs (a) to (e) by means of a notice published in accordance with the regulations.

• (5) The power to make regulations under subsection (4) includes power to make (or to enable the Commissioners to make)—

• (a) different provision for different purposes;

• (b) different provision for different areas;

• (c) consequential, supplementary, incidental, transitional, transitory or saving provision.

Fuel for private use.

56

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Determination of consideration for fuel supplied for private use.

57

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Importation following zero-rated free zone supply: deemed supply

57A

• (1) This section applies where—

• (a) a person (“P”) receives—

• (i) a zero-rated free zone supply of goods, or

• (ii) a zero-rated free zone supply of services, and

• (b) Condition A or B is met.

• (2) Condition A is met where, after the supply mentioned in subsection (1)(a), there is, in respect of the goods supplied or the goods on or in relation to which the service is performed (as the case may be), a breach of a requirement relating to the free zone procedure without there having been a zero-rated free zone supply by P of the goods after receiving the supply mentioned in that subsection.

• (3) Condition B is met where, after the supply mentioned in subsection (1)(a)—

• (a) the goods supplied or the goods on or in relation to which the service is performed (as the case may be) are imported (other than by virtue of Condition A being met) without there having been a zero-rated free zone supply by P of those goods after receiving the supply mentioned in that subsection, and

• (b) within the period of three months beginning with the day on which the goods are imported, P does not make a taxable supply of the goods to another person in the course or furtherance of P’s business.

• (4) For the purposes of this Act—

• (a) a supply of goods identical to the zero-rated free zone supply of goods or a supply of services identical to the zero-rated free zone supply of services (as the case may be) is to be treated as having been made—

• (i) by P in the course or furtherance of a business carried on by P, and

• (ii) to P for the purposes of that business, and

• (b) that supply is to be treated—

• (i) as taking place on the relevant day,

• (ii) as being made in the United Kingdom,

• (iii) as having the same value as the zero-rated free zone supply of goods or the zero-rated free zone supply of services (as the case may be), and

• (iv) as a taxable (and not a zero-rated) supply.

• (5) For the purposes of Condition A, the reference to a breach of a requirement relating to a free zone procedure is to—

• (a) a breach, occurring while the procedure has effect, of the terms of the declaration for the procedure or of any other requirement imposed in relation to the procedure by or under Schedule 2 to TCTA 2018, or

• (b) a breach, occurring at any time after the declaration was made, of any other requirement imposed by an officer of Revenue and Customs in relation to the goods for which the declaration was made.

• (6) The Commissioners may by regulations make provision—

• (a) modifying the application or effect of this section, or

• (b) applying this section, with or without modification,

in relation to cases set out in the regulations.

• (7) In this section—

• “free zone procedure” has the same meaning as in Group 22 of Schedule 8 (free zones);

• “relevant day” means—in a case where this section applies by virtue of Condition A being met, the day on which the breach mentioned in that Condition occurred;in a case where this section applies by virtue of Condition B being met, the day after the end of the period mentioned in that Condition;

• “zero-rated free zone supply of goods” means a supply of goods within Item 1(a) of Group 22 to Schedule 8 (free zone procedure goods);

• “zero-rated free zone supply of services” means a supply of services within Item 1(b) of that Group (free zone services).

Part IV — Administration, collection and enforcement

General administrative provisions

General provisions relating to the administration and collection of VAT.

58

Schedule 11 shall have effect, subject to section 58ZA(5)(a), with respect to the administration, collection and enforcement of VAT.

International VAT arrangements

58ZA

• (1) The Commissioners may make regulations imposing obligations on taxable persons for the purpose of giving effect to international VAT arrangements.

• (2) The regulations may require the submission to the Commissioners by taxable persons of statements containing such particulars of—

• (a) relevant transactions in which the taxable persons are concerned, and

• (b) the persons concerned in those transactions,

as may be specified in the regulations.

• (3) The regulations may provide for statements about relevant transactions to be submitted at such times and intervals, in such cases and in such form and manner as may be specified—

• (a) in the regulations, or

• (b) by the Commissioners in accordance with the regulations.

• (4) A transaction is a “relevant transaction” for the purposes of this section if information about it could be relevant to any international VAT arrangements.

• (5) If any international VAT arrangements have effect—

• (a) any Schedule 11 information power is exercisable with respect to matters that are relevant to those arrangements as it is exercisable with respect to matters that are relevant for any of the purposes of this Act, and

• (b) any power of an officer of Revenue and Customs to obtain information or documents under any enactment or subordinate legislation relating to VAT is exercisable in relation to matters which are relevant to those arrangements.

• (6) The Commissioners may disclose information which is obtained as a result of subsection (5) (and no obligation of secrecy, whether imposed by statute or otherwise, prevents such disclosure) if—

• (a) the disclosure is required in accordance with the international VAT arrangements, and

• (b) the Commissioners are satisfied that the recipient is bound, or has undertaken, both to observe rules of confidentiality which are no less strict than those applying to the information in the United Kingdom and to use the information only for the purposes contemplated by the arrangements.

• (7) Powers are exercisable as a result of subsection (5) only if the Commissioners have given (and not withdrawn) a direction in writing authorising their use (either generally or in relation to specified cases).

• (8) The Commissioners may not make regulations under this section, or give a direction under subsection (7), unless they consider that making the regulations or giving the direction would facilitate the administration, collection or enforcement of VAT.

• (9) In this section—

• “international VAT arrangements” means arrangements which—have effect by virtue of an Order in Council under section 173 of the Finance Act 2006, andrelate to VAT or any tax corresponding to VAT imposed under the law of the territory, or any of the territories, in relation to which the arrangements have been made, and

• “Schedule 11 information power” means any power of the Commissioners under Schedule 11 relating to—the keeping of accounts,the making of returns and the submission of other documents to the Commissioners,the production, use and contents of invoices,the keeping and preservation of records, andthe furnishing of information and the production of documents.

Disclosure of avoidance schemes

Disclosure of avoidance schemes

58A

Schedule 11A (which imposes disclosure requirements relating to the use of schemes for avoiding VAT) shall have effect.

Payment by cheque

58B

Regulations under section 95(1) of the Finance Act 2007 (payment by cheque) may, in particular, provide for a payment which is made by cheque in contravention of regulations under section 25(1) above to be treated as made when the cheque clears, as defined in the regulations under section 95(1) of that Act.

Default surcharges and other penalties and criminal offences

The default surcharge.

59

• (1) Subject to subsction (1A) below if, by the last day on which a taxable person is required in accordance with regulations under this Act to furnish a return for a prescribed accounting period—

• (a) the Commissioners have not received that return, or

• (b) the Commissioners have received that return but have not received the amount of VAT shown on the return as payable by him in respect of that period,

then that person shall be regarded for the purposes of this section as being in default in respect of that period.

• (1A) A person shall not be regarded for the purposes of this section as being in default in respect of any prescribed accounting period if that period is one in respect of which he is required by virtue of any order under section 28 to make any payment on account of VAT.

• (2) Subject to subsections (9) and (10) below, subsection (4) below applies in any case where—

• (a) a taxable person is in default in respect of a prescribed accounting period; and

• (b) the Commissioners serve notice on the taxable person (a “surcharge liability notice”) specifying as a surcharge period for the purposes of this section a period ending on the first anniversary of the last day of the period referred to in paragraph (a) above and beginning, subject to subsection (3) below, on the date of the notice.

• (3) If a surcharge liability notice is served by reason of a default in respect of a prescribed accounting period and that period ends at or before the expiry of an existing surcharge period already notified to the taxable person concerned, the surcharge period specified in that notice shall be expressed as a continuation of the existing surcharge period and, accordingly, for the purposes of this section, that existing period and its extension shall be regarded as a single surcharge period.

• (4) Subject to subsections (7) to (10) below, if a taxable person on whom a surcharge liability notice has been served—

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

• (b) has outstanding VAT for that prescribed accounting period,

he shall be liable to a surcharge equal to whichever is the greater of the following, namely, the specified percentage of his outstanding VAT for that prescribed accounting period and £30.

• (5) Subject to subsections (7) to (10) below, the specified percentage referred to in subsection (4) above shall be determined in relation to a prescribed accounting period by reference to the number of such periods in respect of which the taxable person is in default during the surcharge period and for which he has outstanding VAT, so that—

• (a) in relation to the first such prescribed accounting period, the specified percentage is 2 per cent;

• (b) in relation to the second such period, the specified percentage is 5 per cent;

• (c) in relation to the third such period, the specified percentage is 10 per cent; and

• (d) in relation to each such period after the third, the specified percentage is 15 per cent.

• (6) For the purposes of subsections (4) and (5) above a person has outstanding VAT for a prescribed accounting period if some or all of the VAT for which he is liable in respect of that period has not been paid by the last day on which he is required (as mentioned in subsection (1) above) to make a return for that period; and the reference in subsection (4) above to a person’s outstanding VAT for a prescribed accounting period is to so much of the VAT for which he is so liable as has not been paid by that day.

• (7) If a person who, apart from this subsection, would be liable to a surcharge under subsection (4) above satisfies the Commissioners or, on appeal, a tribunal that, in the case of a default which is material to the surcharge—

• (a) the return or, as the case may be, the VAT shown on the return was despatched at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners within the appropriate time limit, or

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

he shall not be liable to the surcharge and for the purposes of the preceding provisions of this section he shall be treated as not having been in default in respect of the prescribed accounting period in question (and, accordingly, any surcharge liability notice the service of which depended upon that default shall be deemed not to have been served).

• (8) For the purposes of subsection (7) above, a default is material to a surcharge if—

• (a) it is the default which, by virtue of subsection (4) above, gives rise to the surcharge; or

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

• (9) In any case where—

• (a) the conduct by virtue of which a person is in default in respect of a prescribed accounting period is also conduct falling within section 69(1), and

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

the default shall be left out of account for the purposes of subsections (2) to (5) above.

• (10) If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a prescribed accounting period specified in the direction shall be left out of account for the purposes of subsections (2) to (5) above.

• (11) For the purposes of this section references to a thing’s being done by any day include references to its being done on that day.

Default surcharge: payments on account.

59A

• (1) For the purposes of this section a taxable person shall be regarded as in default in respect of any prescribed accounting period if the period is one in respect of which he is required, by virtue of an order under section 28, to make any payment on account of VAT and either—

• (a) a payment which he is so required to make in respect of that period has not been received in full by the Commissioners by the day on which it became due; or

• (b) he would, but for section 59(1A), be in default in respect of that period for the purposes of section 59.

• (2) Subject to subsections (10) and (11) below, subsection (4) below applies in any case where—

• (a) a taxable person is in default in respect of a prescribed accounting period; and

• (b) the Commissioners serve notice on the taxable person (a “surcharge liability notice”) specifying as a surcharge period for the purposes of this section a period which—

• (i) begins, subject to subsection (3) below, on the date of the notice; and

• (ii) ends on the first anniversary of the last day of the period referred to in paragraph (a) above.

• (3) If—

• (a) a surcharge liability notice is served by reason of a default in respect of a prescribed accounting period, and

• (b) that period ends at or before the expiry of an existing surcharge period already notified to the taxable person concerned,

the surcharge period specified in that notice shall be expressed as a continuation of the existing surcharge period; and, accordingly, the existing period and its extension shall be regarded as a single surcharge period.

• (4) Subject to subsections (7) to (11) below, if—

• (a) a taxable person on whom a surcharge liability notice has been served is in default in respect of a prescribed accounting period,

• (b) that prescribed accounting period is one ending within the surcharge period specified in (or extended by) that notice, and

• (c) the aggregate value of his defaults in respect of that prescribed accounting period is more than nil,

that person shall be liable to a surcharge equal to whichever is the greater of £30 and the specified percentage of the aggregate value of his defaults in respect of that prescribed accounting period.

• (5) Subject to subsections (7) to (11) below, the specified percentage referred to in subsection (4) above shall be determined in relation to a prescribed accounting period by reference to the number of such periods during the surcharge period which are periods in respect of which the taxable person is in default and in respect of which the value of his defaults is more than nil, so that—

• (a) in relation to the first such prescribed accounting period, the specified percentage is 2 per cent.;

• (b) in relation to the second such period, the specified percentage is 5 per cent.;

• (c) in relation to the third such period, the specified percentage is 10 per cent.; and

• (d) in relation to each such period after the third, the specified percentage is 15 per cent.

• (6) For the purposes of this section the aggregate value of a person’s defaults in respect of a prescribed accounting period shall be calculated as follows—

• (a) where the whole or any part of a payment in respect of that period on account of VAT was not received by the Commissioners by the day on which it became due, an amount equal to that payment or, as the case may be, to that part of it shall be taken to be the value of the default relating to that payment;

• (b) if there is more than one default with a value given by paragraph (a) above, those values shall be aggregated;

• (c) the total given by paragraph (b) above, or (where there is only one default) the value of the default under paragraph (a) above, shall be taken to be the value for that period of that person’s defaults on payments on account;

• (d) the value of any default by that person which is a default falling within subsection (1)(b) above shall be taken to be equal to the amount of any outstanding VAT less the amount of unpaid payments on account; and

• (e) the aggregate value of a person’s defaults in respect of that period shall be taken to be the aggregate of—

• (i) the value for that period of that person’s defaults (if any) on payments on account; and

• (ii) the value of any default of his in respect of that period that falls within subsection (1)(b) above.

• (7) In the application of subsection (6) above for the calculation of the aggregate value of a person’s defaults in respect of a prescribed accounting period—

• (a) the amount of outstanding VAT referred to in paragraph (d) of that subsection is the amount (if any) which would be the amount of that person’s outstanding VAT for that period for the purposes of section 59(4); and

• (b) the amount of unpaid payments on account referred to in that paragraph is the amount (if any) equal to so much of any payments on account of VAT (being payments in respect of that period) as has not been received by the Commissioners by the last day on which that person is required (as mentioned in section 59(1)) to make a return for that period.

• (8) If a person who, apart from this subsection, would be liable to a surcharge under subsection (4) above satisfies the Commissioners or, on appeal, a tribunal—

• (a) in the case of a default that is material for the purposes of the surcharge and falls within subsection (1)(a) above—

• (i) that the payment on account of VAT was despatched at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners by the day on which it became due, or

• (ii) that there is a reasonable excuse for the payment not having been so despatched,

or

• (b) in the case of a default that is material for the purposes of the surcharge and falls within subsection (1)(b) above, that the condition specified in section 59(7)(a) or (b) is satisfied as respects the default,

he shall not be liable to the surcharge and for the purposes of the preceding provisions of this section he shall be treated as not having been in default in respect of the prescribed accounting period in question (and, accordingly, any surcharge liability notice the service of which depended upon that default shall be deemed not to have been served).

• (9) For the purposes of subsection (8) above, a default is material to a surcharge if—

• (a) it is the default which, by virtue of subsection (4) above, gives rise to the surcharge; or

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

• (10) In any case where—

• (a) the conduct by virtue of which a person is in default in respect of a prescribed accounting period is also conduct falling within section 69(1), and

• (b) by reason of that conduct, the person concerned is assessed to a penalty under section 69,

the default shall be left out of account for the purposes of subsections (2) to (5) above.

• (11) If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a prescribed accounting period specified in the direction shall be left out of account for the purposes of subsections (2) to (5) above.

• (12) For the purposes of this section the Commissioners shall be taken not to receive a payment by the day on which it becomes due unless it is made in such a manner as secures (in a case where the payment is made otherwise than in cash) that, by the last day for the payment of that amount, all the transactions can be completed that need to be completed before the whole amount of the payment becomes available to the Commissioners.

• (13) In determining for the purposes of this section whether any person would, but for section 59(1A), be in default in respect of any period for the purposes of section 59, subsection (12) above shall be deemed to apply for the purposes of section 59 as it applies for the purposes of this section.

• (14) For the purposes of this section references to a thing’s being done by any day include references to its being done on that day.

Relationship between sections 59 and 59A.

59B

• (1) This section applies in each of the following cases, namely—

• (a) where a section 28 accounting period ends within a surcharge period begun or extended by the service on a taxable person (whether before or after the coming into force of section 59A) of a surcharge liability notice under section 59; and

• (b) where a prescribed accounting period which is not a section 28 accounting period ends within a surcharge period begun or extended by the service on a taxable person of a surcharge liability notice under section 59A.

• (2) In a case falling within subsection (1)(a) above section 59A shall have effect as if—

• (a) subject to paragraph (b) below, the section 28 accounting period were deemed to be a period ending within a surcharge period begun or, as the case may be, extended by a notice served under section 59A; but

• (b) any question—

• (i) whether a surcharge period was begun or extended by the notice, or

• (ii) whether the taxable person was in default in respect of any prescribed accounting period which was not a section 28 accounting period but ended within the surcharge period begun or extended by that notice,

were to be determined as it would be determined for the purposes of section 59.

• (3) In a case falling within subsection (1)(b) above section 59 shall have effect as if—

• (a) subject to paragraph (b) below, the prescribed accounting period that is not a section 28 accounting period were deemed to be a period ending within a surcharge period begun or, as the case may be, extended by a notice served under section 59;

• (b) any question—

• (i) whether a surcharge period was begun or extended by the notice, or

• (ii) whether the taxable person was in default in respect of any prescribed accounting period which was a section 28 accounting period but ended within the surcharge period begun or extended by that notice,

were to be determined as it would be determined for the purposes of section 59A; and

• (c) that person were to be treated as having had outstanding VAT for a section 28 accounting period in any case where the aggregate value of his defaults in respect of that period was, for the purposes of section 59A, more than nil.

• (4) In this section “ a section 28 accounting period ”, in relation to a taxable person, means any prescribed accounting period ending on or after the day on which the Finance Act 1996 was passed in respect of which that person is liable by virtue of an order under section 28 to make any payment on account of VAT.

VAT evasion: conduct involving dishonesty.

60

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VAT evasion: liability of directors etc.

61

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Incorrect certificates as to zero-rating etc.

62

• (1) Subject to subsections (3) and (4) below, where—

• (a) a person to whom one or more supplies are, or are to be, made—

• (i) gives to the supplier a certificate that the supply or supplies fall, or will fall, wholly or partly within any of the Groups of Schedule 7A, Group 5 or 6 of Schedule 8 or Group 1 of Schedule 9, or

• (ii) gives to the supplier a certificate for the purposes of section 18B(2)(d) or 18C(1)(c),

and

• (b) the certificate is incorrect,

the person giving the certificate shall be liable to a penalty.

• (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (1B) Where—

• (a) a person gives a certificate for the purposes of Note (5R) to Group 12 of Schedule 8 with respect to a supply of a motor vehicle, and

• (b) the certificate is incorrect,

the person giving the certificate is to be liable to a penalty.

• (2) The amount of the penalty shall be equal to—

• (a) in a case where the penalty is imposed by virtue of subsection (1) above, the difference between—

• (i) the amount of the VAT which would have been chargeable on the supply or supplies if the certificate had been correct; and

• (ii) the amount of VAT actually chargeable;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) in a case where it is imposed by virtue of subsection (1B), the difference between—

• (i) the amount of the VAT which would have been chargeable on the supply if the certificate had been correct, and

• (ii) the amount of VAT actually chargeable.

• (3) The giving or preparing of a certificate shall not give rise to a penalty under this section if the person who gave or prepared it satisfies the Commissioners or, on appeal, a tribunal that there is a reasonable excuse for his having given or prepared it.

• (4) Where by reason of giving or preparing a certificate a person is convicted of an offence (whether under this Act or otherwise), the giving of the certificate shall not also give rise to a penalty under this section.

Penalty for misdeclaration or neglect resulting in VAT loss for one accounting period equalling or exceeding certain amounts.

63

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Repeated misdeclarations.

64

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inaccuracies in section 55A statements

65

• (1) Where—

• (a) a section 55A statement containing a material inaccuracy has been submitted by any person to the Commissioners;

• (b) the Commissioners have, within 6 months of discovering the inaccuracy, issued that person with a written warning identifying that statement and stating that future inaccuracies might result in the service of a notice for the purposes of this section;

• (c) another section 55A statement containing a material inaccuracy (“the second inaccurate statement”) has been submitted by that person to the Commissioners;

• (d) the submission date for the second inaccurate statement fell within the period of 2 years beginning with the day after the warning was issued;

• (e) the Commissioners have, within 6 months of discovering the inaccuracy in the second inaccurate statement, served that person with a notice identifying that statement and stating that future inaccuracies will attract a penalty under this section;

• (f) yet another section 55A statement containing a material inaccuracy is submitted by that person to the Commissioners; and

• (g) the submission date for the statement falling within paragraph (f) above is not more than 2 years after the service of the notice or the date on which any previous statement attracting a penalty was submitted by that person to the Commissioners,

that person shall be liable to a penalty of £100 in respect of the statement so falling.

• (2) Subject to subsections (3) and (4) below, a section 55A statement shall be regarded for the purposes of this section as containing a material inaccuracy if, having regard to the matters required to be included in the statement, the inclusion or omission of any information from the statement is misleading in any material respect.

• (3) An inaccuracy contained in a section 55A statement shall not be regarded as material for the purposes of this section if—

• (a) the person who submitted the statement satisfies the Commissioners or, on appeal, a tribunal that there is a reasonable excuse for the inaccuracy; or

• (b) at a time when he had no reason to believe that enquiries were being made by the Commissioners into his affairs, that person furnished the Commissioners with full information with respect to the inaccuracy.

• (4) Where, by reason of the submission of a statement containing a material inaccuracy by any person, that person is convicted of an offence (whether under this Act or otherwise), the inaccuracy to which the conviction relates shall be regarded for the purposes of this section as not being material.

• (5) Where the only statement identified in a warning or notice served for the purposes of subsection (1)(b) or (e) above is one which (whether by virtue of either or both of subsections (3) and (4) above or otherwise) is regarded as containing no material inaccuracies, that warning or notice shall be deemed not to have been issued or served for those purposes.

• (6) In this section—

• “section 55A statement” means a statement which is required to be submitted to the Commissioners in accordance with regulations under paragraph 2(3A) of Schedule 11; and

• “submission date”, in relation to a section 55A statement, means whichever is the earlier of the last day for the submission of the statement to the Commissioners in accordance with those regulations and the day on which it was in fact submitted to them.

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to submit section 55A statement

66

• (1) If, by the last day on which a person is required in accordance with regulations under this Act to submit a section 55A statement for any prescribed period to the Commissioners, the Commissioners have not received that statement, that person shall be regarded for the purposes of this section as being in default in relation to that statement until it is submitted.

• (2) Where any person is in default in respect of any section 55A statement the Commissioners may serve notice on him stating—

• (a) that he is in default in relation to the statement specified in the notice;

• (b) that (subject to the liability mentioned in paragraph (d) below) no action will be taken if he remedies the default before the end of the period of 14 days beginning with the day after the service of the notice;

• (c) that if the default is not so remedied, that person will become liable in respect of his default to penalties calculated on a daily basis from the end of that period in accordance with the following provisions of this section; and

• (d) that that person will become liable, without any further notices being served under this section, to penalties under this section if he commits any more defaults before a period of 12 months has elapsed without his being in default.

• (3) Where a person has been served with a notice under subsection (2) above, he shall become liable under this section—

• (a) if the statement to which the notice relates is not submitted before the end of the period of 14 days beginning with the day after the service of the notice, to a penalty in respect of that statement; and

• (b) whether or not that statement is so submitted, to a penalty in respect of any section 55A statement the last day for the submission of which is after the service and before the expiry of the notice and in relation to which he is in default.

• (4) For the purposes of this section a notice served on any person under subsection (2) above shall continue in force—

• (a) except in a case falling within paragraph (b) below, until the end of the period of 12 months beginning with the day after the service of the notice; and

• (b) where at any time in that period of 12 months that person is in default in relation to any section 55A statement other than one in relation to which he was in default when the notice was served, until a period of 12 months has elapsed without that person becoming liable to a penalty under this section in respect of any section 55A statement .

• (5) The amount of any penalty to which a person who has been served with a notice under subsection (2) above is liable under this section shall be whichever is the greater of £50 and—

• (a) in the case of a liability in respect of the statement to which the notice relates, a penalty of £5 for every day for which the default continues after the end of the period of 14 days mentioned in subsection (3)(a) above, up to a maximum of 100 days; and

• (b) in the case of a liability in respect of any other statement, a penalty of the relevant amount for every day for which the default continues, up to a maximum of 100 days.

• (6) In subsection (5)(b) above “the relevant amount”, in relation to a person served with a notice under subsection (2) above, means—

• (a) £5, where (that person not having been liable to a penalty under this section in respect of the statement to which the notice relates) the statement in question is the first statement in respect of which that person has become liable to a penalty while the notice has been in force;

• (b) £10 where the statement in question is the second statement in respect of which he has become so liable while the notice has been in force (counting the statement to which the notice relates where he has become liable in respect of that statement); and

• (c) £15 in any other case.

• (7) If a person who, apart from this subsection, would be liable to a penalty under this section satisfies the Commissioners or, on appeal a tribunal, that—

• (a) a section 55A statement has been submitted at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners within the appropriate time limit; or

• (b) there is a reasonable excuse for such a statement not having been dispatched,

he shall be treated for the purposes of this section and sections 59 to 65 and 67 to 71, 73... and 76 and Schedule 24 to the Finance Act 2007 as not having been in default in relation to that statement and, accordingly, he shall not be liable to any penalty under this section or that Schedule in respect of that statement and any notice served under subsection (2) above exclusively in relation to the failure to submit that statement shall have no effect for the purposes of this section.

• (8) If it appears to the Treasury that there has been a change in the value of money since 1st January 1993 or, as the case may be, the last occasion when the sums specified in subsections (5) and (6) above were varied, they may by order substitute for the sums for the time being specified in those subsections such other sums as appear to them to be justified by the change; but an order under this section shall not apply to any default in relation to a statement the last day for the submission of which was before the order comes into force.

• (9) In this section, “section 55A statement” means a statement which is required to be submitted to the Commissioners in accordance with regulations under paragraph 2(3A) of Schedule 11.

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to notify and unauthorised issue of invoices.

67

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Breach of controlled goods agreement

67A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Breaches of walking possession agreements.

68

• (1) This section applies where—

• (a) in accordance with regulations under section 51 of the Finance Act 1997 (enforcement by distress), a distress is authorised to be levied on the goods and chattels of a person (a “person in default”) who has refused or neglected to pay any VAT due or any amount recoverable as if it were VAT due, and

• (b) the person levying the distress and the person in default have entered into a walking possession agreement, as defined in subsection (2) below.

• (2) In this section a “walking possession agreement” means an agreement under which, in consideration of the property distrained upon being allowed to remain in the custody of the person in default and of the delaying of its sale, the person in default—

• (a) acknowledges that the property specified in the agreement is under distraint and held in walking possession; and

• (b) undertakes that, except with the consent of the Commissioners and subject to such conditions as they may impose, he will not remove or allow the removal of any of the specified property from the premises named in the agreement.

• (3) Subject to subsection (4) below, if the person in default is in breach of the undertaking contained in a walking possession agreement, he shall be liable to a penalty equal to half of the VAT or other amount referred to in subsection (1)(a) above.

• (4) The person in default shall not be liable to a penalty under subsection (3) above if he satisfies the Commissioners or, on appeal, a tribunal that there is a reasonable excuse for the breach in question.

• (5) This section extends only to Northern Ireland.

Breaches of regulatory provisions.

69

• (1) If any person fails to comply with a regulatory requirement, that is to say, a requirement imposed under—

• (a) paragraph 11 or 12 of Schedule 1, paragraph 7 of Schedule 1A ... , paragraph 5 of Schedule 3A or paragraph 9(1) or (2)(a) of Schedule 4B or paragraph 5 of Schedule 3A ; or

• (b) any regulations made under section 48 requiring a VAT representative, for the purposes of registration, to notify the Commissioners that his appointment has taken effect or has ceased to have effect; or

• (ba) paragraph 2(3B) of Schedule 11; or

• (c) paragraph 6(1) or 7 of Schedule 11; or

• (d) any regulations or rules made under this Act, other than rules made under paragraph 9 of Schedule 12; or

• (e) any order made by the Treasury under this Act; or

• (f) any regulations made under the European Communities Act 1972 and relating to VAT, ; or

• (g) section 18A in the form of a condition imposed by the Commissioners under subsection (1) or (6) of that section,or—

• (h) section 77E (display of VAT registration numbers on online marketplaces),

he shall be liable, subject to subsections (8) and (9) below and section 76(6), to a penalty equal to the prescribed rate multiplied by the number of days on which the failure continues (up to a maximum of 100) or, if it is greater, to a penalty of £50.

• (2) If any person fails to comply with a requirement to preserve records imposed under ... paragraph 6(3) of Schedule 11, he shall be liable, subject to the following provisions of this section, to a penalty of £500.

• (3) Subject to subsection (4) below, in relation to a failure to comply with any regulatory requirement, the prescribed rate shall be determined by reference to the number of occasions in the period of 2 years preceding the beginning of the failure in question on which the person concerned has previously failed to comply with that requirement and, subject to the following provisions of this section, the prescribed rate shall be—

• (a) if there has been no such previous occasion in that period, £5;

• (b) if there has been only one such occasion in that period, £10; and

• (c) in any other case, £15.

• (4) For the purposes of subsection (3) above—

• (a) a failure to comply with any regulatory requirement shall be disregarded if, as a result of the failure, the person concerned became liable for a surcharge under section 59 or 59A to a penalty point or a penalty under Schedule 24 to the Finance Act 2021;

• (b) a continuing failure to comply with any such requirement shall be regarded as one occasion of failure occurring on the date on which the failure began;

• (c) if the same omission gives rise to a failure to comply with more than one such requirement, it shall nevertheless be regarded as the occasion of only one failure; and

• (d) in relation to a failure to comply with a requirement imposed by regulations as to the furnishing of a return or as to the payment of VAT, a previous failure to comply with such a requirement as to either of those matters shall be regarded as a previous failure to comply with the requirement in question.

• (5) Where the failure referred to in subsection (1) above consists—

• (a) in not paying the VAT due in respect of any period within the time required by regulations under section 25(1), or

• (b) in not furnishing a return in respect of any period within the time required by regulations under paragraph 2(1) of Schedule 11,

the prescribed rate shall be whichever is the greater of that which is appropriate under subsection (3)(a) to (c) above and an amount equal to one-sixth, one-third or one-half of 1 per cent. of the VAT due in respect of that period, the appropriate fraction being determined according to whether subsection (3)(a), (b) or (c) above is applicable.

• (6) For the purposes of subsection (5) above, the VAT due—

• (a) if the person concerned has furnished a return, shall be taken to be the VAT shown in the return as that for which he is accountable in respect of the period in question, and

• (b) in any other case, shall be taken to be such VAT as has been assessed for that period and notified to him under section 73(1).

• (7) If it appears to the Treasury that there has been a change in the value of money since 25th July 1985 or, as the case may be, the last occasion when the power conferred by this subsection was exercised, they may by order substitute for the sums for the time being specified in subsections (2) and (3)(a) to (c) above such other sums as appear to them to be justified by the change; but an order under this subsection shall not apply to a failure which began before the date on which the order comes into force.

• (8) A failure by any person to comply with any regulatory requirement or the requirement referred to in subsection (2) above shall not give rise to liability to a penalty under this section if the person concerned satisfies the Commissioners or, on appeal, a tribunal that there is a reasonable excuse for the failure; and a failure in respect of which the Commissioners or tribunal have been so satisfied shall be disregarded for the purposes of subsection (3) above.

• (9) Where, by reason of conduct falling within subsection (1) or (2) above—

• (a) a person is convicted of an offence (whether under this Act or otherwise), or

• (b) a person is assessed to a surcharge under section 59 or 59A, or

• (c) a person is assessed to a penalty under section 60 or 63 or a penalty under Schedule 24 to the Finance Act 2007, or

• (d) a person is awarded a penalty point or assessed to a penalty under Schedule 24 to the Finance Act 2021,

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

• (10) This section applies in relation to failures occurring before as well as after the commencement of this Act, and for that purpose any reference to any provision of this Act includes a reference to the corresponding provision of the enactments repealed by this Act.

Breach of record-keeping requirements etc. in relation to transactions in gold.

69A

• (1) This section applies where a person fails to comply with a requirement of regulations under section 13(5)(a) or (b) of the Finance Act 1999 (gold: duties to keep records or provide information).

Where this section applies, the provisions of section 69 do not apply.

• (2) A person who fails to comply with any such requirement is liable to a penalty not exceeding 17.5% of the value of the transactions to which the failure relates.

• (3) For the purposes of assessing the amount of any such penalty, the value of the transactions to which the failure relates shall be determined by the Commissioners to the best of their judgement and notified by them to the person liable.

• (4) No assessment of a penalty under this section shall be made more than 2 years after evidence of facts sufficient in the opinion of the Commissioners to justify the making of the assessment comes to their knowledge.

• (5) The reference in subsection (4) above to facts sufficient to justify the making of the assessment is to facts sufficient—

• (a) to indicate that there had been a failure to comply with any such requirement as is referred to in subsection (1) above, and

• (b) to determine the value of the transactions to which the failure relates.

• (6) A failure by any person to comply with any such requirement as is mentioned in subsection (1) above shall not give rise to a liability to a penalty under this section if the person concerned satisfies the Commissioners or, on appeal, a tribunal, that there is a reasonable excuse for the failure.

• (7) Where by reason of conduct falling within subsection (1) above a person—

• (a) is assessed to a penalty under section 60 or a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007, or

• (b) is convicted of an offence (whether under this Act or otherwise),

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

Breach of record-keeping requirements imposed by directions

69B

• (1) If any person fails to comply with a requirement imposed under paragraph 6A(1) of Schedule 11, the person is liable to a penalty.

• (2) The amount of the penalty is equal to £200 multiplied by the number of days on which the failure continues (up to a maximum of 30 days).

• (3) If any person fails to comply with a requirement to preserve records imposed under paragraph 6A(6) of Schedule 11, the person is liable to a penalty of £500.

• (4) If it appears to the Treasury that there has been a change in the value of money since—

• (a) the day on which the Finance Act 2006 is passed, or

• (b) (if later) the last occasion when the power conferred by this subsection was exercised,

they may by order substitute for the sums for the time being specified in subsections (2) and (3) such other sums as appear to them to be justified by the change.

• (5) But any such order does not apply to a failure which began before the date on which the order comes into force.

• (6) A failure by any person to comply with any requirement mentioned in subsection (1) or (3) does not give rise to a liability to a penalty under this section if the person concerned satisfies—

• (a) the Commissioners, or

• (b) on appeal, a tribunal,

that there is a reasonable excuse for the failure.

• (7) If by reason of conduct falling within subsection (1) or (3) a person—

• (a) is assessed to a penalty under section 60 or a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007, or

• (b) is convicted of an offence (whether under this Act or otherwise),

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

Transactions connected with VAT fraud

69C

• (1) A person (T) is liable to a penalty where—

• (a) T has entered into a transaction involving the making of a supply by or to T (“the transaction”), and

• (b) conditions A to C are satisfied.

• (2) Condition A is that the transaction was connected with the fraudulent evasion of VAT by another person (whether occurring before or after T entered into the transaction).

• (3) Condition B is that T knew or should have known that the transaction was connected with the fraudulent evasion of VAT by another person.

• (4) Condition C is that HMRC have issued a decision (“the denial decision”) in relation to the supply which—

• (a) prevents T from exercising or relying on a VAT right in relation to the supply,

• (b) is based on the facts which satisfy conditions A and B in relation to the transaction, and

• (c) applies a relevant principle of EU case law (whether or not in circumstances that are the same as the circumstances in which any relevant case was decided by the European Court of Justice).

• (5) In this section “VAT right” includes the right to deduct input tax, the right to apply a zero rate to international supplies and any other right connected with VAT in relation to a supply.

• (6) The relevant principles of EU case law for the purposes of this section are the principles established by the European Court of Justice in the following cases—

• (a) joined Cases C-439/04 and C-440/04 Axel Kittel v. Belgian State; Belgium v. Recolta Recycling (denial of right to deduct input tax), and

• (b) Case C-273/11 (b)Mecsek-Gabona Kft v Nemzeti Adó- és Vámhivatal Dél-dunántúli Regionális Adó Főigazgatósága (denial of right to zero rate),

as developed or extended by that Court in any other cases relating to the denial or refusal of a VAT right in order to prevent abuses of the VAT system which were decided before the coming into force of section 42 of TCTA 2018.

• (7) The penalty payable under this section is 30% of the potential lost VAT.

• (8) The potential lost VAT is—

• (a) the additional VAT which becomes payable by T as a result of the denial decision,

• (b) the VAT which is not repaid to T as a result of that decision, or

• (c) in a case where as a result of that decision VAT is not repaid to T and additional VAT becomes payable by T, the aggregate of the VAT that is not repaid and the additional VAT.

• (9) Where T is liable to a penalty under this section the Commissioners may assess the amount of the penalty and notify it to T accordingly.

• (10) No assessment of a penalty under this section may be made more than two years after the denial decision is issued.

• (11) The assessment of a penalty under this section may be made immediately after the denial decision is made (and notice of the assessment may be given to T in the same document as the notice of the decision).

• (12) Where by reason of actions involved in making a claim to exercise or rely on a VAT right in relation to a supply T—

• (a) is liable to a penalty for an inaccuracy under paragraph 1 of Schedule 24 to the Finance Act 2007 for which T has been assessed (and the assessment has not been successfully appealed against by T or withdrawn), or

• (b) is convicted of an offence (whether under this Act or otherwise),

those actions do not give rise to liability to a penalty under this section.

Penalties under section 69C: officers' liability

69D

• (1) Where—

• (a) a company is liable to a penalty under section 69C, and

• (b) the actions of the company which give rise to that liability were attributable to an officer of the company (“the officer”),

the officer is liable to pay such portion of the penalty (which may be equal to or less than 100%) as HMRC may specify in a notice given to the officer (a “decision notice”).

• (2) Before giving the officer a decision notice HMRC must—

• (a) inform the officer that they are considering doing so, and

• (b) afford the officer the opportunity to make representations about whether a decision notice should be given or the portion that should be specified.

• (3) A decision notice—

• (a) may not be given before the amount of the penalty due from the company has been assessed (but it may be given immediately after that has happened), and

• (b) may not be given more than two years after the denial decision relevant to that penalty was issued.