Finance (No. 2) Bill (HC Bill 190)

(b) for sub-paragraph (5) substitute—

“(5) A registration request—

(a) must contain any further information, and any
declaration about its contents, that the
5Commissioners 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
10before 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) 15In 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
20the heading before it.

(8) For the title substitute—

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

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

(a) 25in 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) 30in 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) 35omit 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) 40in 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) 5After paragraph 15 insert—

“15A Section 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
1046 of Council Regulation (EU) No 904/2010.”

(8) For the title substitute—

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

“ Part 3 15Special schemes: collection etc of UK VAT

16 Assessments: general modifications of section 73

(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
20required 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) 25In 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.

16A Assessment in connection with increase in consideration

(1) 30Sub-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) 35Section 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
516K(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) 10one 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
15after 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-
20paragraph (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)).

16B 25Assessments: consequential modifications

References 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
30assessment);

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

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

16C Deemed amendments of relevant special scheme returns

(1) 35Where 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) 40Where 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
5Implementing 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) 10specify 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.

16D Interest on VAT: “reckonable date”

(1) 15Sub-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
20assessed, 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
25in 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
30under 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) 35Where 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
40paragraph 16K(2).

16E Default surcharge: notice of special surcharge period

(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
45either—

(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
5by 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) 10For 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
15person 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
20respect 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) 25A 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
30notice 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).

16F Further default after service of notice

(1) If a person on whom a special surcharge liability notice has been
35served—

(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,

40the 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
45special 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) 5for 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) 10A 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
15“the person’s outstanding special scheme VAT” for the tax
period).

16G Default surcharge: exceptions for reasonable excuse etc

(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
20person 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
25would 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) 30Where 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
35not 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
40of 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) 45A 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
5to 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) 10Section 71(1) (meaning of “reasonable excuse”) applies for the
purposes of this paragraph as it applies for the purposes of
sections 59 to 70.

16H Interest in certain cases of official error

(1) Section 78 (interest in certain cases of official error) applies as
15follows 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
20under 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
25VAT 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
3078(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”.

16I 35Overpayments

(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) 40has 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
45those 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”),
5otherwise 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) 10in 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
15Commissioners 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
20virtue 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) 25by 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
30Commissioners.

(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.

16J Overpayments: supplementary

(1) 35In 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
40section 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) 45references 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) 5under 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
10than 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) 15in 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) 20in 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
25administering 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.

16K 30Increase or decrease in consideration for a supply

(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) 35after 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
40increase 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
45the 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
5Implementing 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
10whole 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
15the 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
20which, 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) 25A 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.

16L 30Bad debts

Where 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
35bad 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:
40claim for refund of VAT).

16M Penalties for errors: disclosure

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

(a) 45an inaccuracy in the return,

(b) a supply of false information, or

(c) a withholding of information,