Value Added Tax Act 1994 Schedule 3B Part 3

Special schemes: collection etc. of UK VAT

Schedule 3B Part 3 deals with how UK VAT is assessed, collected, and enforced under special accounting schemes, including rules on assessments, surcharges, overpayments, bad debts, and penalties.

• HMRC can raise assessments on special scheme participants using modified versions of the standard VAT assessment rules, including where consideration for a supply increases after the original return
• A default surcharge regime applies to late or missing special scheme returns, with escalating penalties starting at 2% for a first default and rising to 15% for repeated defaults, subject to a minimum of £30
• Participants may claim refunds for overpaid VAT (subject to time limits and unjust enrichment rules) and for bad debts, and must amend their returns when the consideration for a supply increases or decreases
• Voluntary correction of errors on a special scheme return counts as disclosure to HMRC for penalty mitigation purposes, and any UK VAT owed under a special scheme can be set off against amounts HMRC owes the participant