VATF35322 - What to consider prior to determining whether to use an intervention: making and issuing a Notice of Direction: applying the measure: the Notice of Direction (NoD): what records should the direction ask to be kept?
The NoD needs to be tailored to the particular circumstances of the business and HMRC’s particular requirements in terms of the additional records from that business that might assist us in identifying VAT fraud. The records required to be kept should be clearly and unambiguously set out. The NoD should not require the taxable person to keep records it is legally required to keep under different parts of the legislation, such as proper tax invoices to evidence a claim to input tax. However, you can require the taxable person to cross-reference the additional information to VAT invoices or other information, provided this is necessary to enable the additional information to be utilised effectively. This is in accordance with paragraph 6A(2) of Schedule 11 to the VAT Act 1994.
The NoD measure was originally introduced to enable HMRC to require businesses to keep records such as International Mobile Equipment Identification (IMEI) numbers and other unique serial numbers, to assist us in checking the movement of goods that might be subject to carousel fraud activity (VATF23540). However, the statutory power does not impose any limitation on the type of information or form of record that can be the subject of a NoD, provided that the criteria as explained above are met.
The important points to remember are that you must be clear as to why the particular record is required, how HMRC will make use of the information and that you have taken account of the impact of the NoD on the business.