Value Added Tax Act 1994 Schedule 3BA

Part 4 — Persons registered under non-UK special schemes

Schedule 3BA Part 4 sets out the rules that apply to businesses registered under another EU member state's special VAT accounting scheme who make supplies of digital services treated as made in the UK, covering their registration obligations, assessments, surcharges, record-keeping, and overpayment claims.

• A participant in a non-UK special scheme (another EU state's implementation of the relevant EU directive provisions) is exempt from UK VAT registration but is treated as if registered when making relevant UK supplies, and HMRC may cancel an existing Schedule 1A registration if the person intends to join such a scheme.
• HMRC can assess participants based on their non-UK returns, and a default surcharge regime applies where returns are late or payments are missed, with surcharge percentages escalating from 2% to 15% for repeated defaults during a special surcharge period.
• Participants may claim refunds for overpaid UK VAT and must amend their non-UK returns to reflect any increases or decreases in consideration or bad debts written off after the return was submitted.
• Participants must keep detailed electronic records of UK supply transactions for ten years, and any corrections to non-UK returns that disclose inaccuracies are treated as disclosures to HMRC for penalty purposes.

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