VEXP90900 - Assessments, adjustments and demands for tax: Use of the power in VAT Act 1994 section 30(10)

Section 30(10) of VAT Act 1994

30(10) Where the supply of any goods has been zero-rated by virtue of subsection (6) above or in pursuance of regulations made under subsection (8) or (9) above and—

(a)  the goods are found in the United Kingdom after the date on which they were alleged to have been or were to be exported or shipped; or

(b)   any condition specified in the relevant regulations under subsection (6), (8) or (9) above or imposed by the Commissioners is not complied with,

and the presence of the goods in the United Kingdom after that date or the non-observance of the condition has not been authorised for the purposes of this subsection by the Commissioners, the goods shall be liable to forfeiture under the Management Act and the VAT that would have been chargeable on the supply but for the zero-rating shall become payable forthwith by the person to whom the goods were supplied or by any person in whose possession the goods are found in the United Kingdom; but the Commissioners may, if they think fit, waive payment of the whole or part of that VAT.

Provisions within Schedule 9ZA ensure that Section 30(10) can be applied to NI-EU transactions.

Paragraph 17, of Schedule 9ZA

17(3) The Commissioners may by regulations provide for the zero-rating of supplies of goods, or of such goods as may be specified in the regulations, in cases where—

a) the supply in question involves both the removal of the goods from Northern Ireland and their acquisition in a member State by a person who is liable for VAT on the acquisition in accordance with provisions of the law of that member State corresponding, in relation to that member State, to the provisions of paragraph 2, and

(b) such other conditions, if any, as may be specified in the regulations or the Commissioners may impose are fulfilled.

(4) Section 30(10) applies to a supply of goods that has been zero-rated in pursuance of regulations made under sub-paragraph (3) as it applies to a supply of goods that has been zero-rated in pursuance of regulations made under section 30(8) or (9).

Provisions within Schedule 9ZB ensure that Section 30(10) can be applied to supplies of goods between Great Britain and Northern Ireland (and vice versa) and in relation to supplies from Northern Ireland to the Isle of Man.

Paragraph 12, of Schedule 9ZB

12(1) Where a supply of goods has been zero-rated under paragraph 3(1), or as a result of regulations under section 30(8), on the basis that the goods have been or are to be removed from Northern Ireland to Great Britain, section 30(10) (forfeiture of goods found in the United Kingdom) applies in relation to that supply as if any reference to the United Kingdom were to Northern Ireland.

(2) Where a supply of goods has been zero-rated under paragraph 3(1) or 31A(3), or as a result of regulations under section 30(8), on the basis that the goods have been or are to be removed from Great Britain to Northern Ireland, section 30(10) applies in relation to that supply as if any reference to the United Kingdom were to Great Britain.

Paragraph 33, of Schedule 9ZB

33(2) Where a supply of goods has been zero-rated as a result of paragraph 3(1) or regulations under section 30(8), on the basis that the goods have been or are to be removed from Northern Ireland to the Isle of Man, section 30(10) applies in relation to that supply as if any reference to the United Kingdom were to Northern Ireland.

These provisions taken together means that Section 30(10) can be applied to any goods that are supplied zero-rated in any part of the UK as exports and are found in any other part of the UK.

They permit the Commissioners to demand payment of output tax from the person to whom the goods were supplied or any person found in possession of the goods anywhere in the UK where

  • goods supplied for export or removal have not been exported or removed, or
  • relevant conditions for zero rating the supply have not been met.

The occasions on which the powers in section 30(10) have been used are rare and should be used in circumstances where the person to whom the goods are supplied, or in whose possession the goods are found, is implicated in the incorrect treatment. This power should not be used simply as an alternative to circumvent normal assessment time limits.

The most likely circumstances where 30(10) will be used is in connection with the supply of New Means of Transport or the Personal Export Scheme, where the liability to remove the goods normally rests with the customer after the supply.

The decision to apply section 30(10) must be taken having regard to the totality of the circumstances including

  • did the customer benefit from the zero rate?
  • is there a link between the supplier and the customer?
  • whether recovery of VAT from a customer who is not the original buyer might be inequitable, for example where it can be established that the current owner purchased the goods in good faith from the original buyer.

Cases where the VAT is demanded from the consumer and the goods are forfeited will be exceptional and should only be considered in cases where fraud or avoidance by the consumer is actively pursued. Demand and forfeiture should only be pursued with the prior agreement of the relevant policy team.
 

The Commissioners may, if they think fit, waive payment of the whole or part of the VAT due. This discretion should be considered where, for example, the person is not implicated in the incorrect treatment, or it can be established the owner purchased the goods in good faith and did not appreciate that VAT had not been charged.

Before using section 30(10) report the facts to the VAT Fraud, Deductions & Imports Policy team.