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D5: Payment of VAT

Obligation to pay VAT by return deadline

"(2)     Any person required to make a return shall pay to the Controller such amount of VAT as is payable by him in respect of the period to which the return relates not later than the last day on which he is required to make that return." (SI 1995/2518, r.40(2))

Electronic payment mandatory for most

"(2A)     Where a return is made [or is required to be made]5 in accordance with regulations 25 and 25A above using an electronic return system or a compatible software return system, the relevant payment to the Controller required by paragraph (2) above shall be made solely by means of electronic communications that are acceptable to the Commissioners for this purpose." (SI 1995/2518, r.40(2A))

Cheques: time of payment

"(2B)     With effect from 1st April 2010, where a person makes any payment to the Controller required by paragraph (2) above by cheque (whether or not in contravention of paragraph (2A) above)—

(a)     the payment shall be treated as made on the day when the cheque clears to the account of the Controller, and

(b)     that shall be the day when payment of any VAT shown as due on the return is to be treated as received by the Commissioners for the purposes of section 59 of the Act.

 

(2C)     For the purposes of this regulation, the day on which a cheque clears to the account of the Controller is the second business day following but not including the date of its receipt.

 

(2D)     In this regulation a “business day” is any day except—

(a)     Saturday, Sunday, Good Friday or Christmas Day;

(b)     a bank holiday under the Banking and Financial Dealings Act 1971;

(c)     a day appointed by Royal proclamation as a public fast or thanksgiving day;

(d)     a day declared by an order under section 2(1) of the Banking and Financial Dealings Act 1971 to be a non-business day." (SI 1995/2518, r.40(2B) - (2D))

Payment by reference to excise duty point

(1)     Where in respect of—

(a)     any supply by a taxable person of dutiable goods, or

(b)     an acquisition by any person from another member State of dutiable goods,

the time of supply or acquisition, as the case may be, precedes the duty point in relation to those goods, the VAT in respect of that supply or acquisition shall be accounted for and paid, and any question as to the inclusion of any duty in the value of the supply or acquisition shall be determined, by reference to the duty point or by reference to such later time as the Commissioners may allow." (SI 1995/2518, r.41)

Payment deferral for warehoused excise goods

"(1)     This regulation applies to a registered person who is an approved person within the meaning of the Excise Duties (Deferred Payment) Regulations 1992 in respect of goods which are at a specified warehouse.

 

(2)     Where a person to whom this regulation applies is—

(a)     the person who is liable under section 18(4)(b) of the Act to pay VAT on a supply of goods while the goods are subject to a warehousing regime, or

(b)     liable under section 18D(2) of the Act to pay VAT on a supply of services to which section 18C(3) of the Act applies (specified services performed on or in relation to goods which are subject to a warehousing regime),

he may pay that VAT at or before the relevant time determined in accordance with paragraph (3) below instead of at the time provided for by sections 18(4)(b) or 18D(2)(a) of the Act.

 

(3)     For the purposes of paragraph (2) above the relevant time means—

(a)     in relation to hydrocarbon oils, the 15th day of the month immediately following the month in which the hydrocarbon oils were removed from the warehousing regime;

(b)     in relation to any other goods subject to a duty of excise, the day (payment day) on which the registered person is required to pay the excise duty on the goods in accordance with regulation 5 of the Excise Duties (Deferred Payment) Regulations 1992.

 

(4)     Where any goods of a kind chargeable to a duty of excise qualify for any relief of that duty, that relief shall be disregarded for the purposes of determining the relevant time under paragraph (3) above." (SI 1995/2518, r.43)

Obligation to pay VAT by return deadline

Payments on account of VAT by larger taxpayers

 

Duty to make payments on account

"(1)     A taxable person falling within article 5 or 6 below shall be under a duty to pay, on account of any tax he may become liable to pay in respect of each prescribed accounting period exceeding one month beginning on or after 1st April each year amounts (in this Order referred to as “payments on account”) determined in accordance with this Order at times so determined, provided that in the case of a taxable person falling within article 6 below there shall be no duty to pay such amounts in respect of a prescribed accounting period other than one beginning after the basic period.

 

(2)     Where such a taxable person has a prescribed accounting period exceeding one month which begins on or after 2nd March each year and ends on or before 30th June each year, he shall be under a like duty to make payments on account also in respect of that prescribed accounting period." (SI 1993/2001, r.4)

Annual threshold

"(1)     Subject to paragraph (2) below and article 16 below, a taxable person falls within this article in any year if the total amount of tax which he was liable to pay in respect of the prescribed accounting periods the ends of which fell within the period of one year ending on the last day of his last prescribed accounting period ending before the previous 1st December exceeded £2,300,000.

(2)     Where in any year ending 30th November a prescribed accounting period of the taxable person did not begin on the first day or did not end on the last day of a month, the period of one year shall, for the purpose of this article, be regarded as having comprised those prescribed account periods which related to the tax periods ending within the year ending 30th November of that year to which references are shown in the certificate of registration issued to him." (SI 1993/2001, r.5)

In other words:

(1)    Identify the last 1st December.
(2)    Identify the last prescribed accounting period (“PAP”) to end before that last 1st December.
(3)    Identify the date 12 months before the end of the PAP identified in (2).
(4)    Find the sum of the tax due for all PAPs ending after the date in (3) but before the date in (1).
(5)    If the sum in (4) is greater than the annual threshold, the person falls within article 5.
 

In-year threshold

"(1)     Subject to paragraph (2) below and article 16 below, a taxable person who does not fall within article 5 above shall fall within this article if the total amount of tax which he was liable to pay in respect of the prescribed accounting periods the ends of which fell within any one period of one year ending on the last day of a prescribed accounting period of his ending after 30th November of the previous year exceeded £2,300,000.

(2)     Where in the period of the year referred to in paragraph (1) above a prescribed accounting period of the taxable person did not begin on the first day or did not end on the last day of a month, that period of one year shall, for the purpose of this article, be regarded as having comprised those prescribed accounting periods which related to the tax periods ending within that period of one year to which references are shown in the certificate of registration issued to him." (SI 1993/2001, r.6)

In other words:

(1)    Identify whether the person falls within Article 5.
(2)    If not, identify all the PAPs that have ended after 30 November in the previous year.
(3)    For each PAP, identify the 12 month period ending with the end of that PAP.
(4)    For each 12 month period identified in (3), identify all the PAPs ending in that 12 month period and find the total of the VAT liability for those PAPs.
(5)    If the total liability for the PAPs in any 12 month period (as identified in (3) and calculated in (4)), exceeds the in-year threshold, the person falls within Article 6.
 

Disregard reverse charge supplies

"Where, on application, a taxable person satisfies the Commissioners that, by reason solely of any amount that he is liable to pay by virtue of section 55A(6) of the Act—

(a)     he falls within article 5 or 6 below, or

(b)     the amount of each of his payments on account is increased,

then, with effect from the date of the approval by the Commissioners of the application, any amount that he is so liable to pay by virtue of that section shall be disregarded for the purposes of those articles or, as the case may be, the calculation of the amount of each of his payments on account." (SI 1993/2001, r.2A)

Divisional registrations

"(1)     Subject to paragraph (3) below, where the registration under the Act of a body corporate is and was throughout the prescribed accounting periods mentioned in article 5(1) or 6(1) above in the names of divisions under section 31(1) of the Act3 and those divisions are the same divisions, that body corporate shall not be under a duty to make payments on account by virtue of falling within article 5 or 6 above but shall be under a duty to make payments on account by reference to the business of any division if the total amount of tax which it was liable to pay in respect of the prescribed accounting periods of that division the ends of which fell within the period of one year ending on the last day of—

(a)     that division's last prescribed accounting period ending before 1st December of the previous year, or

(b)     a prescribed accounting period of that division ending after 30th November of the previous year,

and which was referable to the business of that division exceeded the figure specified in article 5(1) or 6(1) respectively.

(2)     Where a relevant division has a prescribed accounting period exceeding one month which begins on or after 2nd March each year and ends on or before 30th June each year, the body corporate shall be under a like duty to make payments on account also in respect of that prescribed accounting period.

(3)     Articles 5(2) and 6(2) above shall apply for the purposes of this article as if for the references therein to the taxable person there were substituted references to a relevant division.

(4)     Where payments on account fall to be made under this article, they shall be calculated and made separately in the case of each relevant division as if it were a taxable person and shall be remitted to the Controller through that division.

(5)     In relation to a body corporate to which this article applies, references in articles 7, 13, 14 and 15 above to—

(a)     the total amount of tax which a taxable person was or will be liable to pay shall be construed as references to the total amount of such tax referable to the business of a relevant division; and

(b)     an application by the taxable person shall be construed as references to an application by the division in respect of which the application is made.

(6)     In this article “relevant division” means a division by reference to the business of which a body corporate is under a duty to make payments on account by virtue of paragraph (1) above." (SI 1993/2001, r.16)

Group registrations

"This Order shall apply in relation to any bodies corporate which are treated as members of a group under section 43 of the Act as if those bodies were one taxable person; and where there is a duty to make a payment on account it shall be the responsibility of the representative member, except that in default of payment by the representative member it shall be the joint and several responsibility of each member of the group." (SI 1993/2001, r.17)

HMRC must give notice of duty to make payments on account

"Save in a case to which regulation 48 applies, the Commissioners shall give to a taxable person who is under a duty to make payments on account notification in writing of—

(a)     the amounts that he is under a duty to pay,

(b)     how those amounts have been calculated, and

(c)     the times for payment of those amounts." (SI 1995/2518, r.45)

Notification of divisions

"(1)     The Commissioners shall notify a relevant division in writing of—

(a)     the amounts of the payments on account that the body corporate is under a duty to make by reference to the business of that division,

(b)     how those amounts have been calculated, and

(c)     the times for payment of those amounts.

(2)     If in respect of a prescribed accounting period the total amount of the payments on account made by a body corporate by reference to the business of a particular relevant division exceeds the amount of VAT due from the body corporate in respect of that period by reference to that business, the amount of the excess shall be paid to the body corporate through that division by the Commissioners if and to the extent that it is not required by section 81 of the Act to be set against any sum which the body corporate is liable to pay to them.

(3)     Section 81 of the Act shall not require any amount which is due to be paid by the Commissioners to a body corporate under paragraph (2) above by reference to the business of a particular relevant division to be set against any sum due from the body corporate otherwise than by reference to that business or to the liabilities of the body corporate arising in connection with that division." (SI 1995/2518, r.48)

Timing of payments

"Subject to article 9 below, in respect of each prescribed accounting period a payment on account shall be made to the Controller not later than—

(a)     the last day of the month next following the end of the first complete month included therein, and

(b)     the last day of the month next following the end of the second complete month included therein." (SI 1993/2001, r.8)

"where a prescribed accounting period does not begin on the first day or does not end on the last day of a month—

(a)     the first payment on account shall be made not later than the last day of the month next following the end of the first complete month included therein, and

(b)     the second payment on account shall be made not later than the last day of the month next following the end of the second complete month included therein.

except that where—

(i)     a prescribed accounting period does not comprise more complete months than one, the first payment on account shall be made not later than the last day of that month and the second payment on account shall be made not later than the end of the prescribed accounting period, or

(ii)     a prescribed accounting period comprises an incomplete month followed by two complete months, the first payment on account shall be made not later than the end of the first complete month and the second payment on account shall be made not later than the end of the second complete month, or

(iii)     a prescribed accounting period comprises an incomplete month followed by two complete months and an incomplete month, the first payment on account shall be made not later than the end of the first complete month and the second payment on account shall be made not later than the end of the second complete month." (SI 1993/2001, r.9)

Must be cleared funds

"(1)     A payment on account and a payment in respect of a return to which regulation 40A above applies shall not be treated as having been made by the last day on which it is required to be made unless it is made in such a manner as secures that all the transactions can be completed that need to be completed before the whole of the amount becomes available to the Commissioners.

(2)     For the purposes of this regulation and regulation 47 below, references to a payment being made by any day include references to its being made on that day." (SI 1995/2518, r.46A)

Amount of payments

"(1)     Subject to paragraph (2) below and articles 12A, 13, 14 and 15 below, the amount of each payment on account to be made by a taxable person who falls within article 5 above shall equal one twenty-fourth of the total amount of tax, excluding the tax on goods imported from countries other than member States, which he was liable to pay in respect of the prescribed accounting periods the ends of which fell within the period (in this Order referred to as “the reference period”)—

(a)     1st October to 30th September in the basic period where he has a prescribed accounting period beginning in April in any year in which he is under a duty to make payments on account,

(b)     1st November to 31st October in the basic period where he has a prescribed accounting period beginning in May in any year in which he is under a duty to make payments on account, and

(c)     1st December to 30th November in the basic period where he has a prescribed accounting period beginning in June in any year in which he is under a duty to make payments on account.

 

(2)     Where in the period of the year mentioned in sub-paragraph (a), (b) or (c) of paragraph (1) above a prescribed accounting period of the taxable person did not begin on the first day or did not end on the last day of a month, the reference period shall, for the purpose of paragraph (1), be regarded as having comprised those prescribed accounting periods which related to the tax periods ending within the period of the year mentioned in sub-paragraph (a), (b) or (c) of paragraph (1) as appropriate to which references are shown in the certificate of registration issued to him." (SI 1993/2001, r.11)

"Subject to articles 12A, 13, 14 and 15 below, the amount of each payment on account to be made by a taxable person who falls within article 6 above shall equal one twenty-fourth of the total amount of tax, excluding the tax on goods imported from countries other than member States, which he was liable to pay in respect of the prescribed accounting periods the ends of which fell within the basic period." (SI 1993/2001, r.12)

Election to pay amount equal to previous months' VAT liability

"(1)     Subject to paragraph (5) below a taxable person who is under a duty to make payments on account may instead of paying the amount calculated in accordance with paragraphs 11 or 12 above elect to pay an amount equal to his liability to VAT (excluding the tax on goods imported from countries other than member States) for the preceding month.

 

(2)     A person making an election under paragraph (1) above shall notify the Commissioners in writing of—

(a)     the election, and

(b)     the date (being a date not less than 30 days after the date of the notification) on which it is to take effect.

 

(3)     Subject to paragraph (4) below, an election under paragraph (1) above shall continue to have effect until a date notified by the taxable person in writing to the Commissioners, which date shall not be earlier than the first anniversary of the date on which the election took effect.

 

(4)     Where the Commissioners are satisfied that an amount paid by a person who has elected in accordance with paragraph (1) above is less than the amount required to be paid by virtue of that paragraph the Commissioners may notify the taxable person in writing that his election shall cease to have effect from a date specified in the notification.

 

(5)     A person may not make an election under paragraph (1) above within 12 months of the date on which any previous election made by him ceased to have effect by virtue of paragraph (4) above." (SI 1993/2001, r.12A)

In-year reduction where liability falls significantly

"If—

(a)     the total amount of tax, excluding the tax on goods imported from countries other than member States, which the taxable person was liable to pay in respect of the prescribed accounting periods the ends of which fell within any one period of one year—

(i)     in the case of a taxable person who falls within article 5 above, ending after the end of his reference period was less than 80 per cent of the total amount of tax relevant in his case under article 11 above, or

(ii)     in the case of a taxable person who falls within article 6 above, ending after the end of the basic period was less than 80 per cent of the total amount of tax referred to in article 12, or

(b)     where such a period of one year has not ended, the Commissioners are satisfied that the total amount of tax, excluding the tax on goods imported from countries other than member States, which the taxable person will be liable to pay in respect of the prescribed accounting periods the ends of which fall within that year will be less than 80 per cent of the total amount of tax referred to in sub-paragraph (i) or (ii) (as the case may be) of paragraph (a) above,

then, with effect from the date of the written approval by the Commissioners of a written application by the taxable person to that effect, but subject to article 14 below, the total amount of tax by reference to which his payments on account fall to be calculated shall be reduced accordingly and the amount of each payment on account beginning with the first payment on account which falls to be made after the date of that approval shall equal one twenty-fourth of the reduced amount." (SI 1993/2001, r.13)

In-year increase where liability increases significantly

"If the total amount of tax, excluding the tax on goods imported from countries other than member States, which the taxable person was liable to pay in respect of the prescribed accounting periods the ends of which fell within any one period of one year—

(a)     in the case of a taxable person who falls within article 5 above, ending after the end of his reference period exceeded by 20 per cent. or more the total amount of tax by reference to which his payments on account are currently calculated, or

(b)     in the case of a taxable person who falls within article 6 above, ending after the end of the basic period exceeded by 20 per cent. or more the total amount of tax by reference to which his payments on account are currently calculated,

then, with effect from the end of the period of one year first mentioned, but subject to article 15 below, the total amount of tax by reference to which his payments on account fall to be calculated shall be increased accordingly and the amount of each payment on account beginning with the first payment on account which falls to be made after the end of that period of one year shall equal one twenty-fourth of the increased amount." (SI 1993/2001, r.14)

Subsequent decrease

"Where the payments on account payable by a taxable person have been increased by virtue of article 14 above and—

(a)     the total amount of tax, excluding the tax on goods imported from countries other than member States, which he was liable to pay in respect of the prescribed accounting periods the ends of which fell within any one period of one year ending after such increase has taken effect was less than 80 per cent of the total amount of tax by reference to which his payments on account are currently calculated, or

(b)     where such a period of one year has not ended, the Commissioners are satisfied that the total amount of tax, excluding the tax on goods imported from countries other than member States, which he will be liable to pay in respect of the prescribed accounting periods the ends of which fall within that year will be less than 80 per cent of the total amount of tax by reference to which his payments on account are currently calculated.

then, with effect from the date of the written approval by the Commissioners of a written application by the taxable person to that effect, the total amount of tax by reference to which his payments on account fall to be calculated shall be reduced accordingly and the amount of each payment on account beginning with the first payment on account which falls to be made after the date of that approval shall equal one twenty-fourth of the reduced amount." (SI 1993/2001, r.15)

Repayment of excess payments on account

"Save in a case to which regulation 48 applies, if in respect of a prescribed accounting period the total amount of the payment on account made by the taxable person exceeds the amount of VAT due from him in respect of that period, the amount of excess shall be paid to him by the Commissioners if and to the extent that it is not required by section 81 of the Act to be set against any sum which he is liable to pay to them." (SI 1995/2518, r.46)

Cessation of duty to make payment on account

"If the total amount of tax which a taxable person who is under a duty to make payments on account was liable to pay in respect of the prescribed accounting periods the ends of which fell within any one period of one year ending after the end of the basic period was less than [£1,800,000]1, then, with effect from the date of the written approval by the Commissioners of a written application by the taxable person to that effect, he shall not be under a duty to make payments on account." (SI 1993/2001, r.7)

Payments on account of VAT by larger taxpayers

Annual accounting for VAT

 

Authorisation to use annual accounting

See B11: VAT returns

Payment schedule

"(2)     A taxable person authorised to pay and account for VAT in accordance with the scheme shall—

(a)     pay to the Commissioners by credit transfer—

(i)     where the taxable person and Commissioners agree to such payment pattern, the quarterly sum, or as the case may be the agreed quarterly sum, no later than the last working day of each of the fourth, seventh and tenth months of his current accounting year;

(ii)     in all other cases, the monthly sum, or as the case may be, the agreed monthly sum, in nine equal monthly instalments, commencing on the last working day of the fourth month of his current accounting year" (SI 1995/2518, r.50(1))

Transitional period

"An authorised person shall, where in any given case the transitional accounting period is—

(a)     4 months or more—

(i)     where the taxable person and Commissioners agree to such payment pattern, pay to the Commissioners by credit transfer on each relevant quarterly date the quarterly sum; or

(ii)     in all other cases, pay to the Commissioners by credit transfer on each relevant monthly date the monthly sum; and

[...]; or

(b)     less than 4 months, make by the last working day of the first month following the end of his transitional accounting period a return in respect of that period, together with any outstanding payment due to the Commissioners in respect of his liability for VAT declared on that return." (SI 1995/2518, r.51)

VAT recoverable as debt due to crown

 

"(1)     VAT due from any person shall be recoverable as a debt due to the Crown." (VATA 1994, Sch 11, para 5(1))

Including payments on account

"Where a taxable person fails to make a payment on account by the last day by which he is required to make it, that payment on account shall be recoverable as if it were VAT due from him." (SI 1995/2518, r.47)

VAT recoverable as debt due to crown

Amount shown on invoice as VAT recoverable as debt due to crown

 

"(2)     Where an invoice shows a supply of goods or services as taking place with VAT chargeable on it, there shall be recoverable from the person who issued the invoice an amount equal to that which is shown on the invoice as VAT or, if VAT is not separately shown, to so much of the total amount shown as payable as is to be taken as representing VAT on the supply.

(3)     Sub-paragraph (2) above applies whether or not—

(a)     the invoice is a VAT invoice issued in pursuance of paragraph 2(1) above; or

(b)     the supply shown on the invoice actually takes or has taken place, or the amount shown as VAT, or any amount of VAT, is or was chargeable on the supply; or

(c)     the person issuing the invoice is a taxable person;

and any sum recoverable from a person under the sub-paragraph shall, if it is in any case VAT be recoverable as such and shall otherwise be recoverable as a debt due to the Crown." (VATA 1994, Sch 11, para 5(2) - (3))

The amount payable is VAT

“…whilst the EU provisions quoted in paragraph 46 above clearly indicate that the charge in question is of VAT, the domestic provision hedges its bets in the last three lines of paragraph 5(3), and if anything suggests that where there is no proper charge to VAT, then the liability is simply that of a distinct debt to the Crown but not VAT as such.” (St Martin’s Medical Services Ltd v. HMRC [2012] UKFTT 485 (TC), §96).

Discharge/repayment of VAT equivalent liability

“It is certainly quite unacceptable for a Member State to charge tax or “equivalent VAT” under its domestic version of Article 21.1.c. and to refuse refunds of that in all circumstances. For instance if, to take an extreme case, the invoice was issued as an honest mistake, the acquirer claimed or retained no input tax deduction, and the issuer re-invoiced the acquirer without VAT, any tax once charged had to be refunded…It is equally unacceptable for the domestic taxing authority to have a discretion as to when to refund and when not to refund…The single test that we consider to be the most important to emerge from the various cases is the proposition that if the issuer of the invoice has done everything in time to enable the transaction to be reversed, such that there is no ultimate breach of neutrality, then any tax initially charged should be refunded.” (St Martin’s Medical Services Ltd v. HMRC [2012] UKFTT 485 (TC), §106).
 

Amount shown on invoice as VAT recoverable as debt due to crown

VAT assessment amount recoverable as VAT

 

"(9)     Where an amount has been assessed and notified to any person under subsection (1), (2), (3), (7), (7A) or (7B) above it shall, subject to the provisions of this Act as to appeals, be deemed to be an amount of VAT due from him and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced." (VATA 1994, s.73(9))

"(9)     If an amount is assessed and notified to any person under this section, then unless, or except to the extent that, the assessment is withdrawn or reduced, that amount shall be recoverable as if it were VAT due from him." (VATA 1994, s.76(9))

VAT assessment amount recoverable as VAT

Joint and several liability: online market places

 

HMRC notify marketplace operator of non-compliance

"(1)     This section applies where a person (“P”) —

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

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

 

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

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

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

 

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

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

(b)     the notice ceasing to have effect.

 

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

 

(5)     The operator is jointly and severally liable to the Commissioners for the amount of VAT payable by P in respect of all taxable supplies of goods made by P through the online marketplace in the period for which the notice has effect." (VATA 1994, s.77B(1) - (5))

 

Meaning of online market place and operator

"(9)     In this section—

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

“operator”, in relation to an online marketplace, means the person who controls access to, and the contents of, the online marketplace." (VATA 1994, s.77B(9))

Period for which notice has effect

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

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

(b)     in accordance with subsection (8).

 

(7)     The Commissioners may at any time give the operator a notice stating that the period for which the liability notice has effect ends with the day specified in the notice." (VATA 1994, s.77B(6) - (7))

 

Ceasing to be the operator of the online marketplace

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

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

(b)     (if later) the day on which the person notifies the Commissioners that the person is no longer the operator." (VATA 1994, s.77B(8))

 

Operator ought to know of breach of registration requirement

"(1)     This section applies where—

(a)     a person (“P”) who makes taxable supplies of goods through an online marketplace is in breach of a Schedule 1A registration requirement, and

(b)     the operator of the online marketplace knows, or should know, that P is in breach of a Schedule 1A registration requirement.

 

(2)     If the operator of the online marketplace does not secure the result in subsection (3), subsection (4) applies.

 

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

(a)     the end of the period of 60 days beginning with the day on which the operator first knew, or should have known, that P was in breach of a Schedule 1A registration requirement, and

(b)     P ceasing to be in breach of a Schedule 1A registration requirement.

 

(4)     The operator is jointly and severally liable to the Commissioners for the amount of VAT payable by P in respect of all taxable supplies of goods made by P through the online marketplace in the relevant period." (VATA 1994, s.77BA(1) - (4))

Online market place and operator

"(8)     In this section “online marketplace” and “operator”, in relation to an online marketplace, have the same meaning as in section 77B." (VATA 1994, s.77BA(8))

Relevant period

"(5)     The relevant period is the period—

(a)     beginning with the day on which the operator first knew, or should have known, that P was in breach of a Schedule 1A registration requirement, and

(b)     ending with P ceasing to be in breach of a Schedule 1A registration requirement.

(6)     But if the operator has been given a notice under section 77B in respect of P, the relevant period does not include—

(a)     any period for which the operator is jointly and severally liable for the amount mentioned in subsection (4) by virtue of section 77B, or

(b)     if the operator secures the result mentioned in section 77B(3), the period beginning with the day on which the operator is given the notice and ending with the day on which the operator secures that result." (VATA 1994, s.77BA(5) - (6))

 

Breach of Sch 1A requirement

"(7)     P is in breach of a Schedule 1A registration requirement if P is liable to be registered under Schedule 1A to this Act, but is not so registered." (VATA 1994, s.77BA(7))

Joint and several liability: online market places
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