SCHEDULE 18 continued PART 1 continued
is also registered, or required to be registered, under this
is not required to discharge any obligation placed on the person as
a taxable person, so far as the obligation relates to relevant
The reference in sub-paragraph (1) to an obligation placed on the
person as a taxable person is to an obligation—
to which the person is subject under or by virtue of this
Finance BillPage 465
to which the person would not be subject if the person
were neither registered nor required to be registered under
A supply made by a participant in a non-UK special scheme is a
“relevant supply” if—
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.
The Commissioners may by regulations specify cases in relation to
which sub-paragraph (1) is not to apply.
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.
In 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).
The 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).
For the purposes of this Schedule, section 73 (assessments:
incorrect returns etc) is to be read as if—
the reference in subsection (1) of that section to returns
required under this Act included relevant non-UK returns,
references in that section to a prescribed accounting period
included a tax period.
(2) See also the modifications in paragraph 21.
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.
Finance BillPage 466
Sub-paragraphs (2) to (4) make modifications of sections 73 and 76
(a) have effect for the purposes of this Schedule, and
are in addition to any other modifications of those sections
made by this Schedule.
Section 73 has effect as if the following were inserted after
subsection (3) of that section—
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
(3B) An assessment under subsection (3A)—
is of VAT due for the tax period mentioned in paragraph
31(1)(a) of Schedule 3BA;
must be made within the time limits provided for in
section 77, and must not be made after the later of—
2 years after the end of the tax period referred to in
one year after evidence of facts sufficient in the
opinion of the Commissioners to justify making the
assessment comes to their knowledge.
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.”
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-
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-
References to prescribed accounting periods in the following
provisions are to be read in accordance with the modifications
made by paragraphs 20 and 21—
section 74 (interest on VAT recovered or recoverable by
section 76 (assessment of amounts due by way of penalty,
interest or surcharge);
(c) section 77 (assessment: time limits).
Finance BillPage 467
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
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.
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—
specify within what period and in what form and manner
notice is to be given under sub-paragraph (3);
require notices to be supported by documentary evidence
described in the regulations.
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—
is an amount assessed under section 73(2) (refunds etc) in
reliance on paragraph 20, or that could have been so
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.
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).
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.
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.
Where section 74(1) or (2) (interest on VAT recovered or
recoverable by assessment) applies in relation to an amount
Finance BillPage 468
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
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
(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)—
condition 1A is that the tax authorities for the
administering member State have not received the return
by the deadline for submitting it;
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
(3) For the purposes of sub-paragraph (1)(b)—
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;
condition 2B is that those tax authorities have, in
accordance with Article 60a of the Implementing
Regulation, issued a reminder of the VAT outstanding.
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—
ending on the first anniversary of the last day of that tax
(b) beginning on the date of the notice.
A period specified under sub-paragraph (4) is a “special surcharge
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).
If a person on whom a special surcharge liability notice has been
Finance BillPage 469
is in default in respect of a tax period ending within the
special surcharge period specified in (or extended by) that
(b) has outstanding special scheme VAT for that tax period,
the person is to be liable to a surcharge of the amount given by
(2) The surcharge is equal to whichever is the greater of—
(a) £30, and
the specified percentage of the person’s outstanding
special scheme VAT for the tax period.
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,
(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%.
“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
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).
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—
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
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—
the person is treated as not having been in default in
respect of the tax period in question, and
accordingly, any special surcharge liability notice the
service of which depended on that default is regarded as
not having been served.