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Finance Act 2014

Status:

This is the original version (as it was originally enacted).

Section 103

SCHEDULE 22Supplies of electronic, broadcasting and telecommunication services: special accounting schemes

This schedule has no associated Explanatory Notes

PART 1Union scheme

New Union scheme for accounting for VAT on certain supplies

1After Schedule 3B to VATA 1994 insert—

SCHEDULE 3BAElectronic, telecommunication and broadcasting services: Union scheme
PART 1Introduction
Overview

1In this Schedule—

(a)Parts 2 and 3 establish a special accounting scheme (called the “Union scheme”) which may be used by certain persons established in the United Kingdom who make supplies of electronically supplied, telecommunication or broadcasting services that are treated as made in other member States;

(b)Part 4 is about persons participating in schemes in other member States that correspond to the Union scheme;

(c)Part 5 is about appeals;

(d)Part 6 contains definitions for the Schedule.

Meaning of “scheme services”

2(1)In this Schedule “scheme services” means electronically supplied services, broadcasting services or telecommunication services.

(2)In sub-paragraph (1)—

  • “broadcasting services” means radio and television broadcasting services;

  • “electronically supplied services” has the same meaning as in Schedule 4A (see paragraph 9(3) and (4) of that Schedule);

  • “telecommunication services” has the same meaning as in Schedule 4A (see paragraph 8(2) of that Schedule).

PART 2Union scheme: registration
The register

3Persons registered under the scheme provided for by this Schedule (“the Union scheme”) are to be registered in a single register kept by the Commissioners for the purposes of the scheme.

Persons who may be registered

4(1)A person may register under the Union scheme if all the following conditions are met—

(a)the person makes or intends to make one or more qualifying supplies of scheme services in the course of a business that the person carries on;

(b)either the person’s business is established in the United Kingdom or (if the person’s business is not established in any member State) the person has a fixed establishment in the United Kingdom;

(c)the person is not barred from registering by sub-paragraph (3), by the second paragraph of Article 369a(2) of Directive 2006/112/EC or by any provision of the Implementing Regulation;

(d)the person is registered under Schedule 1.

(2)A supply of scheme services is a “qualifying supply of scheme services” if the following conditions are met.

1.

The recipient of the services must belong in a member State other than the United Kingdom and must not be a relevant business person.

2.

The person making the supply must not have a fixed establishment in the member State in which the recipient belongs.

(3)A person may not be registered under the Union scheme if the person is a participant in a non-UK special scheme (see paragraph 38(1)).

Becoming registered

5(1)The Commissioners must register under the Union scheme any person who—

(a)satisfies them that the requirements for registration are met, and

(b)makes a request in accordance with this paragraph (a “registration request”).

(2)A registration request made by a person must state the person’s—

(a)name and postal address, and

(b)electronic addresses (including any websites).

(3)A registration request made by a person must also state—

(a)whether or not the person has begun to make qualifying supplies of scheme services, and

(b)(if applicable) the date on which the person began to do so.

(4)A registration request made by a person must also state—

(a)whether or not the person has previously been identified under a non-UK special scheme, and

(b)(if applicable) the date on which the person was first identified under the scheme concerned.

(5)A registration request—

(a)must contain any further information, and any declaration about its contents, that the Commissioners may by regulations require;

(b)must be made by such electronic means, and in such manner, as the Commissioners may direct or may by regulations require.

Notification of changes etc

6(1)A person registered under the Union scheme must inform the Commissioners of the date when the person first makes qualifying supplies of scheme services (unless the person has already given the Commissioners the information mentioned in paragraph 5(3)(b)).

(2)That information, and any information a person is required to give under Article 57h of the Implementing Regulation (notification of certain changes), must be communicated by such electronic means, and in such manner, as the Commissioners may direct or may by regulations require.

Cancellation of registration

7The Commissioners must cancel the registration under the Union scheme of a person if—

(a)the person has ceased to make, or no longer intends to make, supplies of scheme services and has notified them of that fact;

(b)they otherwise determine that the person has ceased to make, or no longer intends to make, supplies of scheme services;

(c)the person has ceased to satisfy any of the other conditions for registration in paragraph 4(1) and has notified them of that fact,

(d)they otherwise determine that the person has ceased to satisfy any of those conditions, or

(e)they determine that the person has persistently failed to comply with the person’s obligations under this Schedule or the Implementing Regulation.

PART 3Union scheme: liability, returns, payment etc
Liability to pay non-UK VAT to Commissioners

8(1)This paragraph applies where a person—

(a)makes a qualifying supply of scheme services, and

(b)is registered under the Union scheme when the supply is made.

(2)The person is liable to pay to the Commissioners the gross amount of VAT on the supply.

(3)The reference in sub-paragraph (2) to the gross amount of VAT on the supply is to the amount of VAT charged on the supply in accordance with the law of the member State in which the supply is treated as made, without any deduction of VAT pursuant to Article 168 of Directive 2006/112/EC.

Union scheme returns

9(1)A person who is or has been registered under the Union scheme must submit a return (a “Union scheme return”) to the Commissioners for each reporting period.

(2)Each quarter for the whole or part of which a person is registered under the Union scheme is a “reporting period” for that person.

Union scheme returns: further requirements

10(1)A Union scheme return is to be made out in sterling.

(2)Any conversion from one currency into another for the purposes of sub-paragraph (1) is to be made using the exchange rates published by the European Central Bank—

(a)for the last day of the reporting period to which the Union scheme return relates, or

(b)if no such rate is published for that day, for the next day for which such a rate is published.

(3)A Union scheme return—

(a)must be submitted to the Commissioners within the 20 days after the last day of the reporting period to which it relates;

(b)must be submitted by such electronic means, and in such manner, as the Commissioners may direct or may by regulations require.

Payment

11(1)A person who is required to submit a Union scheme return must pay, by the deadline for submitting the return, the amounts required in accordance with paragraph 8 in respect of qualifying supplies of scheme services made in the reporting period to which the return relates.

(2)A payment under this paragraph must be made in such manner as the Commissioners may direct or may by regulations require.

Availability of records

12(1)A person who is registered under the Union scheme must make available to the Commissioners, on request, any obligatory records the person is keeping of transactions entered into by the person while registered under the scheme.

(2)The records must be made available by electronic means.

(3)In sub-paragraph (1) “obligatory records” means records kept in accordance with an obligation imposed in accordance with Article 369k of Directive 2006/112/EC.

Amounts required to be paid to other member States

13Section 44 of the Commissioners for Revenue and Customs Act 2005 (requirement to pay receipts into the Consolidated Fund) does not apply to any money received for or on account of VAT that is required to be paid to another member State under Article 46 of Council Regulation (EU) No 904/2010.

PART 4Persons registered under non-UK special schemes
Meaning of “non-UK special scheme”

14(1)In this Schedule “non-UK special scheme” means any provision of the law of a member State other than the United Kingdom which implements Section 3 of Chapter 6 of Title XII of Directive 2006/112/EC.

(2)In relation to a non-UK special scheme, references to the “administering member State” are to the member State under whose law the scheme is established.

Exemption from requirement to register under this Act

15(1)A participant in a non-UK special scheme is not required to be registered under this Act by virtue of making supplies of scheme services in respect of which the participant is required to make returns under that scheme.

(2)Sub-paragraph (1) overrides any contrary provision in this Act.

(3)Where a participant in a non-UK special scheme who is not registered under this Act (“the unregistered person”) makes relevant supplies, it is to be assumed for all purposes of this Act relating to the determination of—

(a)whether or not VAT is chargeable under this Act on those supplies,

(b)how much VAT is chargeable under this Act on those supplies,

(c)the time at which those supplies are treated as taking place, and

(d)any other matter that the Commissioners may specify by regulations,

that the unregistered person is registered under this Act.

(4)Supplies of scheme services made by the unregistered person are “relevant supplies” if—

(a)the value of the supplies must be accounted for in a return required to be made by the unregistered person under the non-UK special scheme, and

(b)the supplies are treated as made in the United Kingdom.

De-registration

16(1)Sub-paragraph (2) applies where a person who is registered under Schedule 1A—

(a)satisfies the Commissioners that the person intends to apply for identification under a non-UK special scheme, and

(b)asks the Commissioners to cancel the person’s registration under Schedule 1A.

(2)The Commissioners may cancel the person’s registration under Schedule 1A with effect from—

(a)the day on which the request is made, or

(b)a later date agreed between the person and the Commissioners.

Scheme participants who are also registered under this Act

17(1)A person who—

(a)is a participant in a non-UK special scheme, and

(b)is also registered, or required to be registered, under this Act,

is not required to discharge any obligation placed on the person as a taxable person, so far as the obligation relates to relevant supplies.

(2)The reference in sub-paragraph (1) to an obligation placed on the person as a taxable person is to an obligation—

(a)to which the person is subject under or by virtue of this Act, and

(b)to which the person would not be subject if the person were neither registered nor required to be registered under this Act.

(3)A supply made by a participant in a non-UK special scheme is a “relevant supply” if—

(a)the value of the supply must be accounted for in a return required to be made by the participant under the non-UK special scheme, and

(b)the supply is treated as made in the United Kingdom.

(4)The Commissioners may by regulations specify cases in relation to which sub-paragraph (1) is not to apply.

(5)In section 25(2) (deduction of input tax from output tax by taxable person) the reference to output tax that is due from the taxable person does not include any VAT that the taxable person is liable under a non-UK special scheme to pay to the tax authorities for the administering member State.

Value of supplies to connected persons

18In paragraph 1 of Schedule 6 (valuation: supply to connected person at less than market value) the reference to a supply made by a taxable person is to be read as including a supply of scheme services that is made by a participant in a non-UK special scheme (and is treated as made in the United Kingdom).

Refund of VAT on supplies of goods and services supplied to scheme participant

19The power of the Commissioners to make regulations under section 39 (repayment of VAT to those in business overseas) includes power to make provision for giving effect to the second sentence of Article 369j of Directive 2006/112/EC (which provides for VAT on certain supplies to participants in special accounting schemes to be refunded in accordance with Directive 2008/9/EC).

Assessments: general modifications of section 73

20(1)For the purposes of this Schedule, section 73 (assessments: incorrect returns etc) is to be read as if—

(a)the reference in subsection (1) of that section to returns required under this Act included relevant non-UK returns, and

(b)references in that section to a prescribed accounting period included a tax period.

(2)See also the modifications in paragraph 21.

(3)In this Schedule “relevant non-UK return” means a non-UK return (see paragraph 38(1)) that is required to be made (wholly or partly) in respect of supplies of scheme services that are treated as made in the United Kingdom.

Assessment in connection with increase in consideration

21(1)Sub-paragraphs (2) to (4) make modifications of sections 73 and 76 which—

(a)have effect for the purposes of this Schedule, and

(b)are in addition to any other modifications of those sections made by this Schedule.

(2)Section 73 has effect as if the following were inserted after subsection (3) of that section—

(3A)Where a person has failed to make an amendment or notification that the person is required to make under paragraph 31 of Schedule 3BA in respect of an increase in the consideration for a UK supply (as defined in paragraph 31(7)), the Commissioners may assess the amount of VAT due from the person as a result of the increase to the best of their judgement and notify it to the person.

(3B)An assessment under subsection (3A)—

(a)is of VAT due for the tax period mentioned in paragraph 31(1)(a) of Schedule 3BA;

(b)must be made within the time limits provided for in section 77, and must not be made after the later of—

(i)2 years after the end of the tax period referred to in paragraph 31(1)(a);

(ii)one year after evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.

(3C)Subject to section 77, where further evidence such as is mentioned in subsection (3B)(b)(ii) comes to the Commissioners’ knowledge after they have made an assessment under subsection (3A), another assessment may be made under that subsection, in addition to any earlier assessment.

(3)The reference in section 73(9) to subsection (1) of that section is taken to include a reference to section 73(3A) (as inserted by sub-paragraph (2)).

(4)Section 76 (assessment of amounts due by way of interest etc) is to be read as if the reference in subsection (5) of that section to section 73(1) included a reference to section 73(3A) (as inserted by sub-paragraph (2)).

Assessments: consequential modifications

22References to prescribed accounting periods in the following provisions are to be read in accordance with the modifications made by paragraphs 20 and 21—

(a)section 74 (interest on VAT recovered or recoverable by assessment);

(b)section 76 (assessment of amounts due by way of penalty, interest or surcharge);

(c)section 77 (assessment: time limits).

Deemed amendments of relevant non-UK returns

23(1)Where a person who has made a relevant non-UK return makes a claim under paragraph 29(7)(b) (overpayments) in relation to an error in the return, the relevant non-UK return is taken for the purposes of this Act to have been amended by the information in the claim.

(2)Where a person who has made a relevant non-UK return gives the Commissioners a notice relating to the return under paragraph 31(2)(b) (increase or decrease in consideration), the relevant non-UK return is taken for the purposes of this Act to have been amended by that information.

(3)Where (in a case not falling within sub-paragraph (1) or (2)) a person who has made a relevant non-UK return notifies the Commissioners (after the expiry of the period during which the non-UK return may be amended under Article 61 of the Implementing Regulation) of a change that needs to be made to the return to correct an error, or rectify an omission, in it, the relevant non-UK return is taken for the purposes of this Act to have been amended by that information.

(4)The Commissioners may by regulations—

(a)specify within what period and in what form and manner notice is to be given under sub-paragraph (3);

(b)require notices to be supported by documentary evidence described in the regulations.

Interest on VAT: “reckonable date”

24(1)Sub-paragraph (2) states the “reckonable date” for the purposes of section 74(1) and (2) for any case where an amount carrying interest under that section—

(a)is an amount assessed under section 73(2) (refunds etc) in reliance on paragraph 20, or that could have been so assessed, and

(b)was correctly paid or credited to the person, but would not have been paid or credited to the person had the facts been as they later turn out to be.

(2)The “reckonable date” is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).

(3)Sub-paragraph (4) states the “reckonable date” for any other case where an amount carrying interest under section 74 is assessed under section 74(1) or (2) in reliance on paragraph 20, or could have been so assessed.

(4)The “reckonable date” is taken to be the latest date by which a non-UK return was required to be made for the tax period to which the amount assessed relates.

(5)Where section 74(1) or (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount assessed under section 73(3A) (as inserted by paragraph 21(2)), the “reckonable date” for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 31(2).

Default surcharge: notice of special surcharge period

25(1)A person who is required to make a relevant non-UK return for a tax period is regarded for the purposes of this paragraph and paragraph 26 as being in default in respect of that period if either—

(a)conditions 1A and 2A are met, or

(b)conditions 1B and 2B are met;

(but see also paragraph 27).

(2)For the purposes of sub-paragraph (1)(a)—

(a)condition 1A is that the tax authorities for the administering member State have not received the return by the deadline for submitting it;

(b)condition 2A is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the obligation to submit the return.

(3)For the purposes of sub-paragraph (1)(b)—

(a)condition 1B is that, by the deadline for submitting the return, the tax authorities for the administering member State have received the return but have not received the amount of VAT shown on the return as payable by the person in respect of the tax period;

(b)condition 2B is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the VAT outstanding.

(4)The Commissioners may serve on a person who is in default in respect of a tax period a notice (a “special surcharge liability notice”) specifying a period—

(a)ending on the first anniversary of the last day of that tax period, and

(b)beginning on the date of the notice.

(5)A period specified under sub-paragraph (4) is a “special surcharge period”.

(6)If a special surcharge liability notice is served in respect of a tax period which ends at or before the end of an existing special surcharge period, the special surcharge period specified in that notice must be expressed as a continuation of the existing special surcharge period (so that the existing period and its extension are regarded as a single special surcharge period).

Further default after service of notice

26(1)If a person on whom a special surcharge liability notice has been served—

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

(b)has outstanding special scheme VAT for that tax period,

the person is to be liable to a surcharge of the amount given by sub-paragraph (2).

(2)The surcharge is equal to whichever is the greater of—

(a)£30, and

(b)the specified percentage of the person’s outstanding special scheme VAT for the tax period.

(3)The specified percentage depends on whether the tax period is the first, second or third etc in the default period in respect of which the person is in default and has outstanding special scheme VAT, and is—

(a)for the first such tax period, 2%;

(b)for the second such tax period, 5%;

(c)for the third such tax period, 10%;

(d)for each such tax period after the third, 15%.

(4)“Special scheme VAT”, in relation to a person, means VAT that the person is liable to pay to the tax authorities for the administering member State under a non-UK special scheme in respect of supplies of scheme services treated as made in the United Kingdom.

(5)A person has “outstanding special scheme VAT” for a tax period if some or all of the special scheme VAT for which the person is liable in respect of that period has not been paid by the deadline for the person to submit a non-UK return for that period (and the amount unpaid is referred to in sub-paragraph (2)(b) as “the person’s outstanding special scheme VAT” for the tax period).

Default surcharge: exceptions for reasonable excuse etc

27(1)A person who would otherwise have been liable to a surcharge under paragraph 26(1) is not to be liable to the surcharge if the person satisfies the Commissioners or, on appeal, the tribunal that, in the case of a default which is material to the surcharge—

(a)the non-UK return or, as the case may be, the VAT shown on that return, was despatched at such a time and in such manner that it was reasonable to expect that it would be received by the tax authorities for the administering member State within the appropriate time limit, or

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

(2)Where sub-paragraph (1) applies to a person—

(a)the person is treated as not having been in default in respect of the tax period in question, and

(b)accordingly, any special surcharge liability notice the service of which depended on that default is regarded as not having been served.

(3)A default is “material” to a surcharge if—

(a)it is the default which gives rise to the surcharge, under paragraph 26(1), or

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

(4)A default is left out of account for the purposes of paragraphs 25(4) and 26(1) if—

(a)the conduct by virtue of which the person is in default is also conduct falling within section 69(1) (breaches of regulatory provisions), and

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

(5)If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a tax period specified in the direction is to be left out of account for the purposes of paragraphs 25(4) and 26(1).

(6)Section 71(1) (meaning of “reasonable excuse”) applies for the purposes of this paragraph as it applies for the purposes of sections 59 to 70.

Interest in certain cases of official error

28(1)Section 78 (interest in certain cases of official error) applies as follows in relation to a case where, due to an error on the part of the Commissioners—

(a)a person has accounted under a non-UK special scheme for an amount by way of UK VAT that was not UK VAT due from the person, and as a result the Commissioners are liable under paragraph 29 to pay (or repay) an amount to the person, or

(b)(in a case not falling within paragraph (a)), a person has paid, in accordance with an obligation under a non-UK special scheme, an amount by way of UK VAT that was not UK VAT due from the person and which the Commissioners are in consequence liable to repay to the person.

(2)Section 78 has effect as if the condition in section 78(1)(a) were met in relation to that person.

(3)In the application of section 78 as a result of this paragraph, section 78(12)(b) is read as providing that any reference in that section to a return is to a return required to be made under a non-UK special scheme.

(4)In section 78, as it applies as a result of this section, “output tax” has the meaning that that expression would have if the reference in section 24(2) to a “taxable person” were to a “person”.

Overpayments

29(1)A person may make a claim if the person—

(a)has made a non-UK return for a tax period relating wholly or partly to supplies of scheme services treated as made in the United Kingdom,

(b)has accounted to the tax authorities for the administering member State for VAT in respect of those supplies, and

(c)in doing so has brought into account as UK VAT due to those authorities an amount (“the overpaid amount”) that was not UK VAT due to them.

(2)A person may make a claim if the person has, as a participant in a non-UK special scheme, paid (to the tax authorities for the administering member State or to the Commissioners) an amount by way of UK VAT that was not UK VAT due (“the overpaid amount”), otherwise than in the circumstances mentioned in sub-paragraph (1)(c).

(3)A person who is or has been a participant in a non-UK special scheme may make a claim if the Commissioners—

(a)have assessed the person to VAT for a tax period, and

(b)in doing so, have brought into account as VAT an amount (“the amount not due”) that was not VAT due.

(4)Where a person makes a claim under sub-paragraph (1) or (2), the Commissioners must repay the overpaid amount to the person.

(5)Where a person makes a claim under sub-paragraph (3), the Commissioners must credit the person with the amount not due.

(6)Where—

(a)as a result of a claim under sub-paragraph (3) an amount is to be credited to a person, and

(b)after setting any sums against that amount under or by virtue of this Act, some or all of the amount remains to the person’s credit,

the Commissioners must pay (or repay) to the person so much of the amount as remains to the person’s credit.

(7)The reference in sub-paragraph (1) to a claim is to a claim made—

(a)by correcting, in accordance with Article 61 of the Implementing Regulation, the error in the non-UK return mentioned in sub-paragraph (1)(a), or

(b)(after the expiry of the period during which the non-UK return may be amended under Article 61) to the Commissioners.

(8)Sub-paragraphs (1) and (2) do not require any amount to be repaid except so far as that is required by Article 63 of the Implementing Regulation.

Overpayments: supplementary

30(1)In section 80—

(a)subsections (3) to (3C) (unjust enrichment), and

(b)subsections (4A), (4C) and (6) (recovery by assessment of amounts wrongly credited),

have effect as if a claim under paragraph 29(1) were a claim under section 80(1), a claim under paragraph 29(2) were a claim under section 80(1B) and a claim under paragraph 29(3) were a claim under section 80(1A).

(2)In section 80(3) to (3C), (4A), (4C) and (6), as applied by sub-paragraph (1)—

(a)references to the crediting of amounts are to be read as including the payment of amounts;

(b)references to a prescribed accounting period include a tax period.

(3)The Commissioners are not liable to repay the overpaid amount on a claim made—

(a)under paragraph 29(2),or

(b)as mentioned in paragraph 29(7)(b),

if the claim is made more than 4 years after the relevant date.

(4)On a claim made under paragraph 29(3), the Commissioners are not liable to credit the amount not due if the claim is made more than 4 years after the relevant date.

(5)The “relevant date” is—

(a)in the case of a claim under paragraph 29(1), the end of the tax period mentioned in paragraph 29(1)(a), except in the case of a claim resulting from an incorrect disclosure;

(b)in the case of a claim under paragraph 29(1) resulting from an incorrect disclosure, the end of the tax period in which the disclosure was made;

(c)in the case of a claim under paragraph 29(2), the date on which the payment was made;

(d)in the case of a claim under paragraph 29(3), the end of the quarter in which the assessment was made.

(6)A person makes an “incorrect disclosure” where—

(a)the person discloses to the tax authorities in question (whether the Commissioners or the tax authorities for the administering member State) that the person has not brought into account for a tax period an amount of UK VAT due for the period (“the disclosed amount”),

(b)the disclosure is made in a later tax period, and

(c)some or all of the disclosed amount is not in fact VAT due.

Increase or decrease in consideration for a supply

31(1)This paragraph applies where—

(a)a person makes a non-UK return for a tax period (“the affected tax period”) relating (wholly or partly) to a UK supply, and

(b)after the return has been made the amount of the consideration for the UK supply increases or decreases.

(2)The person must, in the tax period in which the increase or decrease is accounted for in the person’s business accounts—

(a)amend the non-UK return to take account of the increase or decrease, or

(b)(if the period during which the person is entitled under Article 61 of the Implementing Regulation to amend the non-UK return has expired) notify the Commissioners of the adjustment needed to the figures in the non-UK return because of the increase or decrease.

(3)Where the change to which an amendment or notice under sub-paragraph (2) relates is an increase in the consideration for a UK supply, the person must pay to the tax authorities for the administering member State (in accordance with Article 62 of the Implementing Regulation) or, in a case falling within sub-paragraph (2)(b), the Commissioners, the difference between—

(a)the amount of VAT that was chargeable on the supply before the increase in consideration, and

(b)the amount of VAT that is chargeable in respect of the whole of the increased consideration for the supply.

(4)Where the change to which an amendment or notice under sub-paragraph (2) relates is a decrease in the consideration for a UK supply, the amendment or notice has effect as a claim; and where a claim is made the Commissioners must repay any VAT paid by the person that would not have been VAT due from the person had the consideration for the supply always been the decreased amount.

(5)The Commissioners may by regulations specify—

(a)the latest time by which, and the form and manner in which, a claim or other notice under sub-paragraph (2)(b) must be given;

(b)the latest time by which, and the form in which, a payment under sub-paragraph (3) must be made in a case within sub-paragraph (2)(b).

(6)A payment made under sub-paragraph (3) in a case within sub-paragraph (2)(a) must be made before the end of the tax period referred to in sub-paragraph (2).

(7)In this paragraph “UK supply” means a supply of scheme services that is treated as made in the United Kingdom.

Bad debts

32Where a participant in a non-UK special scheme—

(a)has submitted a non-UK return to the tax authorities for the administering member State, and

(b)amends the return to take account of the writing-off as a bad debt of the whole or part of the consideration for a supply of scheme services that is treated as made in the United Kingdom,

the amending of the return may be treated as the making of a claim to the Commissioners for the purposes of section 36(2) (bad debts: claim for refund of VAT).

Records relating to supplies in UK

33(1)A person who is a participant in a non-UK special scheme must keep records of the transactions which the person enters into for the purposes of, or in connection with, relevant supplies.

(2)A supply made by a participant in a non-UK special scheme is a “relevant supply” if—

(a)the value of the supply must be accounted for in a return required to be made by the participant under the non-UK special scheme, and

(b)the supply is treated as made in the United Kingdom.

(3)The records must be sufficiently detailed to enable the Commissioners to determine whether any special scheme return submitted in respect of the supplies is correct.

(4)The records must be made available on request to the Commissioners by electronic means.

(5)Records must be kept for 10 years beginning with the 1 January following the date on which the transaction was entered into.

Penalties for errors: disclosure

34Where a person corrects a non-UK return in a way that constitutes telling the tax authorities for the administering member State about—

(a)an inaccuracy in the return,

(b)a supply of false information, or

(c)a withholding of information,

the person is regarded as telling HMRC about that for the purposes of paragraph 9 of Schedule 24 to the Finance Act 2007.

Set-offs

35Where a participant in a non-UK special scheme is liable to pay UK VAT to the tax authorities for the administering member State in accordance with the scheme, the UK VAT is regarded for the purposes of section 130(6) of the Finance Act 2008 (set-off: England, Wales and Northern Ireland) as payable to the Commissioners.

PART 5Appeals

36(1)An appeal lies to the tribunal with respect to any of the following—

(a)a refusal to register a person under the Union scheme;

(b)the cancellation of the registration of any person under the Union scheme;

(c)a refusal to make a repayment under paragraph 29 (overpayments), or a decision by the Commissioners as to the amount of the repayment due under that provision;

(d)a refusal to make a repayment under paragraph 31(4) (decrease in consideration);

(e)any liability to a surcharge under paragraph 26 (default surcharge).

(2)Part 5 of this Act (appeals), and any order or regulations under that Part, have effect as if an appeal under this paragraph were an appeal which lies to the tribunal under section 83(1) (but not under any particular paragraph of that subsection).

37Where the Commissioners have made an assessment under section 73 in reliance on paragraph 20 or 21—

(a)section 83(1)(p)(i): (appeals against assessments under section 73(1) etc) applies as if the relevant non-UK return were a return under this Act, and

(b)the references in section 84(3) and (5) to the matters mentioned in section 83(1)(p) are to be read accordingly.

PART 6Interpretation of Schedule

38(1)In this Schedule—

  • “administering member State”, in relation to a non-UK special scheme, has the meaning given by paragraph 14(2);

  • “the Implementing Regulation” means Council Implementing Regulation (EU) No 282/2011;

  • “non-UK return” means a return required to be made, for a tax period, under a non-UK special scheme;

  • “non-UK special scheme” has the meaning given by paragraph 14(1);

  • “participant”, in relation to a non-UK special scheme, means a person who is identified under that scheme;

  • “qualifying supply of scheme services” has the meaning given by paragraph 4(2);

  • “relevant non-UK return” has the meaning given by paragraph 20(3);

  • “reporting period” is to be read in accordance with paragraph 9(2);

  • “scheme services” has the meaning given by paragraph 2;

  • “tax period” means a period for which a person is required to make a return under a non-UK special scheme;

  • “UK VAT” means VAT in respect of supplies of scheme services treated as made in the United Kingdom;

  • “Union scheme” has the meaning given by paragraph 3;

  • “Union scheme return” has the meaning given by paragraph 9(1).

(2)In relation to a non-UK special scheme (or a non-UK return), references in this Schedule to “the tax authorities” are to the tax authorities for the member State under whose law the non-UK special scheme is established.

(3)References in this Schedule to a supply of scheme services being “treated as made” in the United Kingdom are to its being treated as made in the United Kingdom by paragraph 15 of Schedule 4A.

Power to amend provisions about the Union scheme

2In section 3A of VATA 1994 (supply of electronic services in member States: special accounting scheme)—

(a)in subsection (2), after “3B” insert “or 3BA”;

(b)in subsection (3), for “Schedule 3B” substitute “Schedules 3B and 3BA”.

PART 2Non-Union scheme: amendments of Schedule 3B to VATA 1994

Introduction

3Schedule 3B to VATA 1994 (supply of electronic services in member States: special accounting scheme) is amended in accordance with paragraphs 4 to 10.

Extension of non-Union scheme to broadcasting and telecommunication services

4For paragraph 3 (qualifying supplies) substitute—

3(1)In this Schedule “qualifying supply” means a supply of electronically supplied services, telecommunication services or broadcasting services to a person who—

(a)belongs in the United Kingdom or another member State, and

(b)is not a relevant business person.

(2)In sub-paragraph (1)—

  • “broadcasting services” means radio and television broadcasting services;

  • “electronically supplied services” has the same meaning as in Schedule 4A (see paragraph 9(3) and (4) of that Schedule);

  • “telecommunication services” has the same meaning as in Schedule 4A (see paragraph 8(2) of that Schedule).

5For the title of the Schedule substitute—

ELECTRONIC, TELECOMMUNICATION AND BROADCASTING SERVICES: NON-UNION SCHEME.

Consequential and other amendments

6(1)Part 1 of the Schedule (registration) is amended as follows.

(2)In paragraph 2 (persons who may be registered)—

(a)in sub-paragraph (6) for “Article 26c” substitute “Section 2 of Chapter 6 of Title XII of the VAT Directive”;

(b)for sub-paragraph (7) substitute—

(7)In this Schedule “the VAT Directive” means Directive 2006/112/EC (Title XII of which is amended by Council Directive 2008/8/EC).

(3)In paragraph 4 (registration request)—

(a)in sub-paragraph (2) for “paragraph 9 below” substitute “Article 58b of Implementing Regulation (EU) No 282/2011”;

(b)for sub-paragraph (5) substitute—

(5)A registration request—

(a)must contain any further information, and any declaration about its contents, that the Commissioners may by regulations require;

(b)must be made by such electronic means, and in such manner, as the Commissioners may direct or may by regulations require.

(4)Omit paragraph 5 (date on which registration takes effect) and the heading before it.

(5)In paragraph 7 (obligation to notify changes)—

(a)omit sub-paragraphs (1) and (2);

(b)in sub-paragraph (3), for “this paragraph” substitute “Article 57h of Implementing Regulation (EU) No 282/2011”.

(6)In paragraph 8 (cancellation of registration)—

(a)in sub-paragraph (1)(e), after “this Schedule” insert “or Implementing Regulation (EU) No 282/2011”;

(b)omit sub-paragraphs (2) and (3).

(7)Omit paragraph 9 (registration after cancellation for persistent default) and the heading before it.

(8)For the title substitute—

NON-UNION SCHEME: REGISTRATION.

7(1)Part 2 of the Schedule (obligations following registration, etc) is amended as follows.

(2)In paragraph 10 (liability for VAT)—

(a)in sub-paragraph (2), at the end insert “(and the VAT is to be paid without any deduction of VAT pursuant to Article 168 of Directive 2006/112/EC)”;

(b)in sub-paragraph (3), omit “that would have been” and for the words from “if the person” to the end substitute “(see paragraph 17(2))”;

(c)in sub-paragraph (4), omit “that would have been” and the words from “if the person” to the end;

(d)in sub-paragraph (5) omit paragraph (b) and the “and” before it.

(3)In paragraph 11 (obligation to submit special accounting returns)—

(a)in sub-paragraph (1), for “Controller” substitute “Commissioners”;

(b)omit sub-paragraphs (3) to (7).

(4)In paragraph 12 (further obligations with respect to special accounting returns)—

(a)in sub-paragraph (1), for the words from “must” to the end substitute “is to be made out in sterling”;

(b)in sub-paragraph (3), for “Controller” substitute “Commissioners”.

(5)In paragraph 13 (payment of VAT), in sub-paragraph (1), for the words from “at” to “respect of” substitute “by the deadline for submitting the return, pay to the Commissioners the amount of VAT that the person is liable, in accordance with paragraph 10, to pay on qualifying supplies treated as made by the person in”.

(6)In paragraph 15 (Commissioners’ power to request production of records), in sub-paragraph (2)(b), for “Article 26c” substitute “Section 2 of Chapter 6 of Title XII of the VAT Directive”.

(7)After paragraph 15 insert—

15ASection 44 of the Commissioners for Revenue and Customs Act 2005 (requirement to pay receipts into the Consolidated Fund) does not apply to any money received for or on account of VAT that is required to be paid to another member State under Article 46 of Council Regulation (EU) No 904/2010.

(8)For the title substitute—

NON-UNION SCHEME: LIABILITY, RETURNS, PAYMENT ETC.

8For Part 3 of the Schedule (understatements and overstatements of UK VAT) substitute—

PART 3Special schemes: collection etc of UK VAT
Assessments: general modifications of section 73

16(1)For the purposes of this Schedule, section 73 (assessments: incorrect returns etc) is to be read as if—

(a)the reference in subsection (1) of that section to returns required under this Act included relevant special scheme returns, and

(b)references in that section to a prescribed accounting period included a tax period.

(2)See also the modifications in paragraph 16A.

(3)In this Schedule “relevant special scheme return” means a special scheme return that is required to be made (wholly or partly) in respect of supplies of scheme services that are treated as made in the United Kingdom.

Assessment in connection with increase in consideration

16A(1)Sub-paragraphs (2) to (4) make modifications of sections 73 and 76 which—

(a)have effect for the purposes of this Schedule, and

(b)are in addition to any other modifications of those sections made by this Schedule.

(2)Section 73 has effect as if the following were inserted after subsection (3) of that section—

(3A)Where a person has failed to make an amendment or notification that the person is required to make under paragraph 16K of Schedule 3B in respect of an increase in the consideration for a UK supply (as defined in paragraph 16K(7)), the Commissioners may assess the amount of VAT due from the person as a result of the increase to the best of their judgement and notify it to the person.

(3B)An assessment under subsection (3A)—

(a)is of VAT due for the tax period mentioned in paragraph 16K(1)(a) of Schedule 3B;

(b)must be made within the time limits provided for in section 77, and must not be made after the later of—

(i)2 years after the end of the tax period referred to in paragraph 16K(1)(a);

(ii)one year after evidence of facts sufficient in the opinion of the Commissioners to justify making the assessment comes to their knowledge.

(3C)Subject to section 77, where further evidence such as is mentioned in subsection (3B)(b)(ii) comes to the Commissioners’ knowledge after they have made an assessment under subsection (3A), another assessment may be made under that subsection, in addition to any earlier assessment.

(3)The reference in section 73(9) to subsection (1) of that section is taken to include a reference to section 73(3A) (as inserted by sub-paragraph (2)).

(4)Section 76 (assessment of amounts due by way of interest etc) is to be read as if the reference in subsection (5) of that section to section 73(1) included a reference to section 73(3A) (as inserted by sub-paragraph (2)).

Assessments: consequential modifications

16BReferences to prescribed accounting periods in the following provisions are to be read in accordance with the modifications made by paragraphs 16 and 16A—

(a)section 74 (interest on VAT recovered or recoverable by assessment);

(b)section 76 (assessment of amounts due by way of penalty, interest or surcharge);

(c)section 77 (assessment: time limits).

Deemed amendments of relevant special scheme returns

16C(1)Where a person who has made a relevant special scheme return makes a claim under paragraph 16I(7)(b) (overpayments) in relation to an error in the return, the relevant special scheme return is taken for the purposes of this Act to have been amended by the information in the claim.

(2)Where a person who has made a relevant special scheme return gives the Commissioners a notice relating to the return under paragraph 16K(2)(b) (increase or decrease in consideration), the relevant special scheme return is taken for the purposes of this Act to have been amended by that information.

(3)Where (in a case not falling within sub-paragraph (1) or (2)) a person who has made a relevant special scheme return notifies the Commissioners (after the expiry of the period during which the non-UK return may be amended under Article 61 of the Implementing Regulation) of a change that needs to be made to the return to correct an error, or rectify an omission, in it, the relevant special scheme return is taken for the purposes of this Act to have been amended by that information.

(4)The Commissioners may by regulations—

(a)specify within what period and in what form and manner notice may be given under sub-paragraph (3);

(b)require notices to be supported by documentary evidence described in the regulations.

Interest on VAT: “reckonable date”

16D(1)Sub-paragraph (2) states the “reckonable date” for the purposes of section 74(1) and (2) for any case where an amount carrying interest under that section—

(a)is an amount assessed under section 73(2) (refunds etc) in reliance on paragraph 16, or that could have been so assessed, and

(b)was correctly paid or credited to the person, but would not have been paid or credited to the person had the facts been as they later turn out to be.

(2)The “reckonable date” is the first day after the end of the tax period in which the events occurred as a result of which the Commissioners were authorised to make the assessment (that was or could have been made) under section 73(2).

(3)Sub-paragraph (4) states the “reckonable date”, for any other case where an amount carrying interest under section 74 is assessed under section 74(1) or (2) in reliance on paragraph 16, or could have been so assessed.

(4)The “reckonable date” is taken to be the latest date by which a non-UK return was required to be made for the tax period to which the amount assessed relates.

(5)Where section 74(1) or (2) (interest on VAT recovered or recoverable by assessment) applies in relation to an amount assessed under section 73(3A) (as inserted by paragraph 16A(2)), the “reckonable date” for the purposes of section 74(1) or (2) is taken to be the day after the end of the tax period referred to in paragraph 16K(2).

Default surcharge: notice of special surcharge period

16E(1)A person who is required to make a relevant special scheme return for a tax period is regarded for the purposes of this paragraph and paragraph 16F as being in default in respect of that period if either—

(a)conditions 1A and 2A are met, or

(b)conditions 1B and 2B are met;

(but see also paragraph 16G).

(2)For the purposes of sub-paragraph (1)(a)—

(a)condition 1A is that the tax authorities for the administering member State have not received the return by the deadline for submitting it;

(b)condition 2A is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the obligation to submit the return.

(3)For the purposes of sub-paragraph (1)(b)—

(a)condition 1B is that, by the deadline for submitting the return, the tax authorities for the administering member State have received the return but have not received the amount of VAT shown on the return as payable by the person in respect of the tax period;

(b)condition 2B is that those tax authorities have, in accordance with Article 60a of the Implementing Regulation, issued a reminder of the VAT outstanding.

(4)The Commissioners may serve on a person who is in default in respect of a tax period a notice (a “special surcharge liability notice”) specifying a period—

(a)ending on the first anniversary of the last day of that tax period, and

(b)beginning on the date of the notice.

(5)A period specified under sub-paragraph (4) is a “special surcharge period”.

(6)If a special surcharge liability notice is served in respect of a tax period which ends at or before the end of an existing special surcharge period, the special surcharge period specified in that notice must be expressed as a continuation of the existing special surcharge period (so that the existing period and its extension are regarded as a single special surcharge period).

Further default after service of notice

16F(1)If a person on whom a special surcharge liability notice has been served—

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

(b)has outstanding special scheme VAT for that tax period,

the person is to be liable to a surcharge of the amount given by sub-paragraph (2).

(2)The surcharge is equal to whichever is the greater of—

(a)£30, and

(b)the specified percentage of the person’s outstanding special scheme VAT for the tax period.

(3)The specified percentage depends on whether the tax period is the first, second or third etc in the default period in respect of which the person is in default and has outstanding special scheme VAT, and is—

(a)for the first such tax period, 2%;

(b)for the second such tax period, 5%;

(c)for the third such tax period, 10%;

(d)for each such tax period after the third, 15%.

(4)“Special scheme VAT”, in relation to a person, means VAT that the person is liable to pay to the tax authorities for the administering member State under a special scheme in respect of supplies of scheme services treated as made in the United Kingdom.

(5)A person has “outstanding special scheme VAT” for a tax period if some or all of the special scheme VAT for which the person is liable in respect of that period has not been paid by the deadline for the person to submit a special scheme return for that period (and the amount unpaid is referred to in sub-paragraph (2)(b) as “the person’s outstanding special scheme VAT” for the tax period).

Default surcharge: exceptions for reasonable excuse etc

16G(1)A person who would otherwise have been liable to a surcharge under paragraph 16F(1) is not to be liable to the surcharge if the person satisfies the Commissioners or, on appeal, the tribunal that, in the case of a default which is material to the surcharge—

(a)the special scheme return or, as the case may be, the VAT shown on that return, was despatched at such a time and in such manner that it was reasonable to expect that it would be received by the tax authorities for the administering member State within the appropriate time limit, or

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

(2)Where sub-paragraph (1) applies to a person—

(a)the person is treated as not having been in default in respect of the tax period in question, and

(b)accordingly, any special surcharge liability notice the service of which depended on that default is regarded as not having been served.

(3)A default is “material” to a surcharge if—

(a)it is the default which gives rise to the surcharge, under paragraph 16F(1), or

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

(4)A default is left out of account for the purposes of paragraphs 16E(4) and 16F(1) if—

(a)the conduct by virtue of which the person is in default is also conduct falling within section 69(1) (breaches of regulatory provisions), and

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

(5)If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a tax period specified in the direction is to be left out of account for the purposes of paragraphs 16E(4) and 16F(1).

(6)Section 71(1) (meaning of “reasonable excuse”) applies for the purposes of this paragraph as it applies for the purposes of sections 59 to 70.

Interest in certain cases of official error

16H(1)Section 78 (interest in certain cases of official error) applies as follows in relation to a case where, due to an error on the part of the Commissioners—

(a)a person has accounted, under a special scheme, for an amount by way of UK VAT that was not UK VAT due from the person, and as a result the Commissioners are liable under paragraph 16I to pay (or repay) an amount to the person, or

(b)(in a case not falling within paragraph (a)), a person has paid, in accordance with an obligation under a special scheme, an amount by way of UK VAT that was not UK VAT due from the person and which the Commissioners are in consequence liable to repay to the person.

(2)Section 78 has effect as if the condition in section 78(1)(a) were met in relation to that person.

(3)In the application of section 78 as a result of this paragraph, section 78(12)(b) is read as providing that any reference in that section to a return is to a return required to be made under a special scheme.

(4)In section 78 in its application as a result of this section, “output tax” has the meaning that that expression would have if the reference in section 24(2) to a “taxable person” were to a “person”.

Overpayments

16I(1)A person may make a claim if the person—

(a)has made a special scheme return for a tax period relating wholly or partly to supplies of scheme services treated as made in the United Kingdom,

(b)has accounted to the tax authorities for the administering member State (whether that is the United Kingdom or another member State) for VAT in respect of those supplies, and

(c)in doing so has brought into account as UK VAT due to those authorities an amount (“the overpaid amount”) that was not UK VAT due to them.

(2)A person may make a claim if the person has, as a participant in a special scheme, paid (to the tax authorities for the administering member State or to the Commissioners) an amount by way of UK VAT that was not UK VAT due (“the overpaid amount”), otherwise than in the circumstances mentioned in sub-paragraph (1)(c).

(3)A person who is or has been a participant in a special scheme may make a claim if the Commissioners—

(a)have assessed the person to VAT for a tax period, and

(b)in doing so, have brought into account as VAT an amount (“the amount not due”) that was not VAT due.

(4)Where a person makes a claim under sub-paragraph (1) or (2), the Commissioners must repay the overpaid amount to the person.

(5)Where a person makes a claim under sub-paragraph (3), the Commissioners must credit the person with the amount not due.

(6)Where—

(a)as a result of a claim under sub-paragraph (3) an amount is to be credited to a person, and

(b)after setting any sums against that amount under or by virtue of this Act, some or all of the amount remains to the person’s credit,

the Commissioners must pay (or repay) to the person so much of the amount as remains to the person’s credit.

(7)The reference in sub-paragraph (1) to a claim is to a claim made—

(a)by correcting, in accordance with Article 61 of the Implementing Regulation, the error in the non-UK return mentioned in sub-paragraph (1)(a), or

(b)(after the expiry of the period during which the non-UK return may be amended under Article 61) to the Commissioners.

(8)Sub-paragraphs (1) and (2) do not require any amount to be repaid except so far as that is required by Article 63 of the Implementing Regulation.

Overpayments: supplementary

16J(1)In section 80—

(a)subsections (3) to (3C) (unjust enrichment), and

(b)subsections (4A), (4C) and (6) (recovery by assessment of amounts wrongly credited),

have effect as if a claim under paragraph 16I(1) were a claim under section 80(1), a claim under paragraph 16I(2) were a claim under section 80(1B) and a claim under paragraph 16I(3) were a claim under section 80(1A).

(2)In section 80(3) to (3C), (4A), (4C) and (6), as applied by sub-paragraph (1)—

(a)references to the crediting of amounts are to be read as including the payment of amounts;

(b)references to a prescribed accounting period include a tax period.

(3)The Commissioners are not liable to repay the overpaid amount on a claim made—

(a)under paragraph 16I(2),or

(b)as mentioned in paragraph 16I(7)(b),

if the claim is made more than 4 years after the relevant date.

(4)On a claim made under paragraph 16I(3), the Commissioners are not liable to credit the amount not due if the claim is made more than 4 years after the relevant date.

(5)The “relevant date” is—

(a)in the case of a claim under paragraph 16I(1), the end of the tax period mentioned in paragraph 16I(1)(a), except in the case of a claim resulting from an incorrect disclosure;

(b)in the case of a claim under paragraph 16I(1) resulting from an incorrect disclosure, the end of the tax period in which the disclosure was made;

(c)in the case of a claim under paragraph 16I(2), the date on which the payment was made;

(d)in the case of a claim under paragraph 16I(3), the end of the quarter in which the assessment was made.

(6)A person makes an “incorrect disclosure” where—

(a)the person discloses to the tax authorities in question (whether the Commissioners or the tax authorities for the administering member State) that the person has not brought into account for a tax period an amount of UK VAT due for the period (“the disclosed amount”),

(b)the disclosure is made in a later tax period, and

(c)some or all of the disclosed amount is not in fact VAT due.

Increase or decrease in consideration for a supply

16K(1)This paragraph applies where—

(a)a person makes a special scheme return for a tax period (“the affected tax period”) relating (wholly or partly) to a UK supply, and

(b)after the return has been made the amount of the consideration for the UK supply increases or decreases.

(2)The person must, in the tax period in which the increase or decrease is accounted for in the person’s business accounts—

(a)amend the special scheme return to take account of the increase or decrease, or

(b)(if the period during which the person is entitled under Article 61 of the Implementing Regulation to amend the special scheme return has expired) notify the Commissioners of the adjustment needed to the figures in the special scheme return because of the increase or decrease.

(3)Where the change to which an amendment or notice under sub-paragraph (2) relates is an increase in the consideration for a UK supply, the person must pay to the tax authorities for the administering member State (in accordance with Article 62 of the Implementing Regulation) or, in a case falling within sub-paragraph (2)(b), the Commissioners, the difference between—

(a)the amount of VAT that was chargeable on the supply before the increase in consideration, and

(b)the amount of VAT that is chargeable in respect of the whole of the increased consideration for the supply.

(4)Where the change to which an amendment or notice under sub-paragraph (2) relates is a decrease in the consideration for a UK supply, the amendment or notice has effect as a claim; and where a claim is made the Commissioners must repay any VAT paid by the person that would not have been VAT due from the person had the consideration for the supply always been the decreased amount.

(5)The Commissioners may by regulations specify—

(a)the latest time by which, and the form and manner in which, a claim or other notice under sub-paragraph (2)(b) must be given;

(b)the latest time by which, and the form in which, a payment under sub-paragraph (3) must be made in a case within sub-paragraph (2)(b).

(6)A payment made under sub-paragraph (3) in a case within sub-paragraph (2)(a) must be made before the end of the tax period referred to in sub-paragraph (2).

(7)In this paragraph “UK supply” means a supply of scheme services that is treated as made in the United Kingdom.

Bad debts

16LWhere a participant in a special scheme—

(a)has submitted a special scheme return to the tax authorities for the administering member State, and

(b)amends the return to take account of the writing-off as a bad debt of the whole or part of the consideration for a supply of scheme services that is treated as made in the United Kingdom,

the amending of the return may be treated as the making of a claim to the Commissioners for the purposes of section 36(2) (bad debts: claim for refund of VAT).

Penalties for errors: disclosure

16MWhere a person corrects a special scheme return in a way that constitutes telling the tax authorities for the administering member State about—

(a)an inaccuracy in the return,

(b)a supply of false information, or

(c)a withholding of information,

the person is regarded as telling HMRC about that for the purposes of paragraph 9 of Schedule 24 to the Finance Act 2007.

Set-offs

16NWhere a participant in a special scheme is liable to pay UK VAT to the tax authorities for the administering member State in accordance with the scheme, the UK VAT is regarded for the purposes of section 130(6) of the Finance Act 2008 (set-off: England, Wales and Northern Ireland) as payable to the Commissioners.

9(1)Part 4 of the Schedule (application of provisions relating to VAT) is amended as follows.

(2)Paragraph 17 (registration under VATA 1994) is renumbered as sub-paragraph (1) of that paragraph.

(3)In that paragraph, after sub-paragraph (1) (as renumbered), insert—

(2)Where a participant in the special scheme (“the scheme participant”) makes relevant supplies, it is to be assumed for all purposes of this Act relating to the determination of—

(a)whether or not VAT is chargeable under this Act on those supplies,

(b)how much VAT is chargeable under this Act on those supplies,

(c)the time at which those supplies are treated as taking place, and

(d)any other matter that the Commissioners may specify by regulations,

that the scheme participant is registered under this Act.

(3)Supplies of scheme services made by the scheme participant are “relevant supplies” if—

(a)the value of the supplies must be accounted for in a special scheme return, and

(b)the supplies are treated as made in the United Kingdom.

(4)In paragraph 18 (de-registration), in paragraph (b), for “Article 26c,” substitute “Section 2 of Chapter 6 of Title XII of the VAT Directive,”.

(5)After paragraph 18 insert—

Value of supplies to connected persons

18AIn paragraph 1 of Schedule 6 (valuation: supply to connected person at less than market value) the reference to a supply made by a taxable person is to be read as including a supply of scheme services that is made by a participant in the special scheme (and is treated as made in the United Kingdom).

(6)In paragraph 20 (appeals)—

(a)in sub-paragraph (1), for paragraphs (b) and (c) substitute—

(b)a refusal to make a repayment under paragraph 16I (overpayments), or a decision by the Commissioners as to the amount of the repayment due under that provision;

(c)a refusal to make a repayment under paragraph 16K(4) (decrease in consideration);

(d)any liability to a surcharge under paragraph 16F (default surcharge).

(b)after sub-paragraph (2) insert—

(3)Where the Commissioners have made an assessment under section 73 in reliance on paragraph 16 or 16A—

(a)section 83(1)(p)(i): (appeals against assessments under section 73(1) etc) applies as if the relevant special scheme return were a return under this Act, and

(b)the references in section 84(3) and (5) to the matters mentioned in section 83(1)(p) are to be read accordingly.

(7)Omit paragraph 21 (payments on account of non-UK VAT to other member States) and the heading before it (but see paragraph 7(7) of this Schedule).

(8)For the title substitute—

OTHER PROVISIONS ABOUT SPECIAL SCHEMES

10(1)In Part 5 of the Schedule (supplementary), paragraph 23 (interpretation) is amended as follows.

(2)In sub-paragraph (1)—

(a)for the words from ““Article 26c” to the end of the definition of “the Controller” substitute—

  • “administering member State”, in relation to a special scheme, means the member State under whose law the scheme is established (whether that is the United Kingdom or another member State);

  • “the Implementing Regulation” means Implementing Regulation (EU) No 282/2011;

(b)for the definition of “participant in the special scheme”, substitute—

  • “participant in the special scheme” means a person who—

    (a)

    is registered under this Schedule, or

    (b)

    is identified under any provision of the law of another member State which implements Section 2 of Chapter 6 of Title XII of the VAT Directive;

(c)after the definition of “registration request” insert—

  • “relevant special scheme return” has the meaning given by paragraph 16(3);

(d)after the definition of “reporting period” insert—

  • “scheme services” means electronically supplied services, broadcasting services or telecommunication services (and in this definition “electronically supplied services”, “broadcasting services” and “telecommunication services” have the meaning given by paragraph 3(2));

(e)after the definition of “special accounting return” insert—

  • “special scheme” means—

    (a)

    the accounting scheme under this Schedule, or

    (b)

    any other scheme, under the law of another member State, implementing Section 2 of Title XII of Directive 2006/112/EC;

  • “special scheme return” means—

    (a)

    a special accounting return, or

    (b)

    a value added tax return submitted to the tax authorities of another member State;

  • “tax period” means—

    (a)

    a reporting period (under the accounting scheme under this Schedule), or

    (b)

    any other period for which a person is required to make a return under a special scheme;

  • “UK VAT” means VAT which a person is liable to pay (whether in the United Kingdom or another member State) in respect of qualifying supplies treated as made in the United Kingdom at a time when the person is or was a participant in the special scheme;

  • “value added tax return”, in relation to another member State, means any value added tax return required to be submitted under any provision of the law of that member State which implements Article 364 of the VAT Directive (as substituted by Article 5(11) of Council Directive 2008/8/EC);

  • “the VAT Directive” has the meaning given by paragraph 2(7);.

(3)In sub-paragraph (2)(a), for the words from “virtue” to “2002 VAT Directive),” substitute “paragraph 15 of Schedule 4A (place of supply of electronic, telecommunication and broadcasting services),”.

(4)Omit sub-paragraph (3).

PART 3Other amendments: Union and non-Union schemes

11VATA 1994 is amended in accordance with paragraphs 12 to 16.

12(1)Section 3A (supply of electronic services in member States: special accounting scheme) is amended as follows.

(2)In subsection (1), after “services” insert “, telecommunication services or broadcasting services”.

(3)After subsection (1) insert—

(1A)Schedule 3BA—

(a)establishes a special accounting scheme for use by persons established in the UK and supplying electronically supplied services, telecommunication services or broadcasting services in other member States, and

(b)makes provision about corresponding schemes in other member States.

(4)For the heading substitute “Supplies of electronic, telecommunication and broadcasting services: special accounting schemes.”

13In section 76 (assessment of amounts due by way of penalty, interest or surcharge)—

(a)in subsection (1)(a), for “or 59A,” substitute “, section 59A, paragraph 16F of Schedule 3B or paragraph 26 of Schedule 3BA,”;

(b)after subsection (3) insert—

(3A)In the case of a surcharge under paragraph 16F of Schedule 3B or paragraph 26 of Schedule 3BA, the assessment under this section is of an amount due in respect of “the relevant period”, that is to say, the tax period (see section 76A) in respect of which the person is in default and in respect of which the surcharge arises.;

(c)in subsection (5), after each “(3)” insert “or (3A)”.

14After section 76 insert—

76ASection 76: cases involving special accounting schemes

(1)References in section 76 to a prescribed accounting period are to be read as including a tax period so far as that is necessary for the purposes of the references in section 76(1)(a) to paragraph 16F of Schedule 3B and paragraph 26 of Schedule 3BA (assessment of surcharge in certain cases involving special accounting schemes).

(2)References in section 77 to a prescribed accounting period are to be read accordingly.

(3)In this section and section 76 “tax period” means a tax period as defined in paragraph 23(1) of Schedule 3B or paragraph 38(1) of Schedule 3BA, as the case requires.

15In section 77 (assessment: time limits and supplementary assessments)—

(a)in subsection (2), after “subsection (3)” insert “or (3A)”;

(b)in subsection (3) after “subsection (3)” insert “or (3A)”.

16In section 80 (repayment of overpaid VAT etc), in subsection (7), after “this section” insert “(and paragraph 16I of Schedule 3B and paragraph 29 of Schedule 3BA)”.

17In section 84(6) (appeals: variation of amounts assessed by way of surcharge etc), after “70,” insert “or (as the case requires) paragraph 26 of Schedule 3BA or paragraph 16F of Schedule 3B”.

18In paragraph 12 of Schedule 1A to VATA 1994 (cancellation of registration under that Schedule)—

(a)after “Schedule 3B” insert “and paragraph 16 of Schedule 3BA”;

(b)for “that Schedule etc” substitute “the Schedule concerned”.

19(1)Paragraph 1 of Schedule 24 to FA 2007 (penalties for errors) is amended as follows.

(2)In the Table, after the second entry relating to VAT insert—

VATReturn under a special scheme.

(3)Before sub-paragraph (5) insert—

(4A)In this paragraph “return under a special scheme” means any of the following, so far as relating to supplies of services treated as made in the United Kingdom—

(a)a special accounting return under paragraph 11 of Schedule 3B;

(b)a value added tax return submitted under any provision of the law of a member State other than the United Kingdom which implements Article 364 of the VAT Directive (as substituted by Article 5(11) of the Amending Directive);

(c)a value added tax return submitted under any provision of the law of a member State other than the United Kingdom which implements Article 369f of the VAT Directive (as inserted by Article 5(15) of the Amending Directive).

(4B)A value added tax return mentioned in paragraph (b) or (c) of sub-paragraph (4A) is regarded for the purposes of sub-paragraph (1) as given to HMRC when it is submitted to the authority to whom it is required to be submitted.

(4C)In sub-paragraph (4A)—

  • “the VAT Directive” means Directive 2006/112/EC;

  • “the Amending Directive” means Council Directive 2008/8/EC.

20(1)FA 2009 is amended as follows.

(2)In section 101 (late payment interest on sums due to HMRC), after subsection (9) insert—

(10)The reference in subsection (1) to amounts payable to HMRC includes—

(a)amounts of UK VAT payable under a non-UK special scheme;

(b)amounts of UK VAT payable under a special scheme;

and references in Schedule 53 to amounts due or payable to HMRC are to be read accordingly.

(11)In subsection (10)—

(a)expressions used in paragraph (a) have the meaning given by paragraph 23(1) of Schedule 3B to VATA 1994 (non-Union scheme);

(b)expressions used in paragraph (b) have the meaning given by paragraph 38(1) of Schedule 3BA to VATA 1994 (Union scheme).

(3)In section 108 (suspension of penalties during currency of agreement for deferred payment), in the Table in subsection (5), in the entry relating to value added tax, in the second column, after “1994” insert, “or under paragraph 16F of Schedule 3B, or paragraph 26 of Schedule 3BA, to that Act”.

21(1)Schedule 10 to F(No.3)A 2010 (which prospectively amends Schedule 55 to FA 2009, which provides for penalties for failure to make returns) is amended as follows.

(2)In paragraph 2—

(a)after sub-paragraph (2) insert—

(2A)In sub-paragraph (4), in the definition of “filing date”, at the end insert “(or, in the case of a return mentioned in item 7AA or 7AB of the Table, to the tax authorities to whom the return is required to be delivered)”.;

(b)in the words inserted by sub-paragraph (4), after item 7A, insert—

7AAValue added taxRelevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994)
7ABValue added taxRelevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994).

(3)In paragraph 7, in the inserted paragraph 13A(1), for “7A, 7B” substitute “7A to 7B”.

22(1)Schedule 11 to F(No.3)A 2010 (which prospectively amends Schedule 56 to FA 2009, which provides for penalties for failure to make payments) is amended as follows.

(2)In paragraph 2(7), in the inserted words, after item 6B insert—

6BAValue added taxAmount payable under relevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994) (except an amount falling within item 13A, 13AA, 13AB, 23 or 24)The date by which the amount must be paid under the law of the member State which has established the special scheme
6BBValue added taxAmount payable under relevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994) (except an amount falling within item 13A, 13AA, 13AB, 23 or 24)The date by which the amount must be paid under the law of the member State which has established the non-UK special scheme

(3)In paragraph 2(9), in the inserted words, after item 13A insert—

13AAValue added taxAmount assessed under section 73(1) of VATA 1994, by virtue of paragraph 16 of Schedule 3B to that Act, in the absence of a value added tax return (as defined in paragraph 23(1) of that Schedule)The date by which the amount would have been required to be paid under the law of the member State under whose law the return was required
13ABValue added taxAmount assessed under section 73(1) of VATA 1994, by virtue of paragraph 20 of Schedule 3BA to that Act, in the absence of a relevant non-UK return (as defined in paragraph 38(1) of that Schedule)The date by which the amount would have been required to be paid under the law of the member State under whose law the return was required

(4)In paragraph 2(13)(a), in the substituted words, after “6A,” insert “6BA, 6BB,”.

(5)In paragraph 2(14)(a), in the substituted words, after “6A,” insert “6BA, 6BB,”.

(6)In paragraph 7, in the inserted paragraph 8A(1), after “6A,” insert “6BA, 6BB,”.

PART 4Commencement

23(1)The amendments made by this Schedule (except the amendments made by paragraphs 20(2), 21 and 22) have effect in relation to supplies made on or after 1 January 2015 (but see also paragraphs 24 and 25).

(2)Sub-paragraph (1) does not apply in relation to—

(a)the amendment made by paragraph 6(3)(b);

(b)any amendment so far as it confers power to make regulations.

24(1)No registration under Schedule 3BA (inserted by paragraph 1) may take effect before 1 January 2015.

(2)A request for registration under Schedule 3BA that is made before 1 October 2014 is to be treated for the purposes of Article 57d of Implementing Regulation (EU) No 282/2011 (as amended by Council Regulation (EU) No 967/2012) (registration to have effect from first day of subsequent quarter) as if it were made on that date.

25(1)No registration under Schedule 3B that is to be made in reliance on the amendments made by paragraph 4 may take effect before 1 January 2015.

(2)A request for registration under Schedule 3B that is made before 1 October 2014 in reliance on the amendments made by paragraph 4 is to be treated for the purposes of Article 57d of Implementing Regulation (EU) No 282/2011 (as amended by Council Regulation (EU) No 967/2012) as if it were made on that date.

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