What does Schedule 9ZD paragraph 10 of the Value Added Tax Act 1994 require?

Paragraph 10 requires any person registered under the One Stop Shop (OSS) scheme who makes a scheme supply to pay the full gross amount of VAT directly to HMRC. The payment must be made without any deduction for input VAT, meaning businesses cannot offset VAT incurred on purchases against VAT due on scheme supplies.

Can businesses deduct input VAT under the OSS scheme when paying VAT to HMRC?

No. Under paragraph 10, the gross VAT amount must be paid without any deduction for input VAT. Although Article 168 of the EU VAT Directive normally allows businesses to deduct input VAT from output VAT, this right of deduction does not apply when calculating amounts payable under the OSS scheme. The full output VAT must be remitted.

How is VAT calculated on OSS scheme supplies treated as made in the United Kingdom?

Where a scheme supply is treated as made in the United Kingdom, the VAT due is calculated as though the person were fully registered under the VAT Act 1994. This assumption applies to whether VAT is chargeable, how much is due, and any other matters HMRC may specify through regulations.

How is VAT determined on OSS scheme supplies treated as made in an EU member state?

Where a scheme supply is treated as made in an EU member state, the VAT amount is determined in accordance with the law of that particular member state. The destination country's rate and rules apply, and HMRC collects the VAT through the OSS return before passing it on to the relevant member state.

Value Added Tax Act 1994 section Schedule 9ZD para 10

Liability to pay VAT to Commissioners

Section Schedule 9ZD paragraph 10 establishes the obligation for businesses registered under the One Stop Shop (OSS) scheme to pay the full gross amount of VAT to HMRC on scheme supplies, without any input tax deductions.

A person registered under the OSS scheme who makes a scheme supply must pay the full gross VAT amount to HMRC with no deduction for input tax.
For supplies treated as made in the United Kingdom, the VAT is calculated as though the person were fully VAT-registered under the VAT Act 1994, covering whether VAT is chargeable, how much is due, and any other matters HMRC may specify by regulations.
For supplies treated as made in an EU member state, the VAT amount is determined in accordance with the laws of that particular member state.
The gross amount is calculated without any deduction of input VAT under Article 168 of the EU VAT Directive, meaning businesses cannot offset VAT incurred on their purchases against the VAT due on these scheme supplies.

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