Value Added Tax Act 1994 Schedule 9A paragraph 6

Assessment in consequence of a direction

Schedule 9A paragraph 6 sets out how HMRC may assess and recover unpaid VAT that arises when a direction is issued under the anti-avoidance grouping provisions, including time limits, calculation of the actual revenue loss, and joint and several liability.

• Where a direction reveals that VAT should have been paid but was not, HMRC may assess the unpaid tax against the person who received the direction or another relevant person connected with the group arrangement.
• The unpaid tax is calculated by adding together any output tax that should have been due, any input tax credit wrongly claimed, and any overseas trader repayments wrongly received — but the assessment is capped at the actual revenue loss to the Exchequer.
• The assessment must be made within one year of the direction being given, cannot be made if the direction has been withdrawn, and may be included in the same notice as the direction itself.
• Once notified, the assessed amount is treated as VAT due and can be recovered from the assessed person or the representative member of their VAT group; where more than one person is assessed for the same unpaid tax, they are jointly and severally liable.