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HMRC internal manual

VAT Fraud

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HM Revenue & Customs
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What to consider prior to determining whether to use an intervention: making and issuing a Notice of Direction: introduction: the power to specify record keeping requirements

Paragraph 6A of Schedule 11 to the Value Added Tax Act 1994 (VATA) provides HMRC with the power to specify record-keeping requirements through a Notice of Direction (NoD), and lays down the conditions under which HMRC may make such a direction.

(1) The Commissioners may direct any taxable person named in the direction to keep such records as they specify in the direction in relation to such goods as they so specify.

(2) A direction under this paragraph may require the records to be compiled by reference to VAT invoices or any other matter.

(3) The Commissioners may not make a direction under this paragraph unless they have reasonable grounds for believing that the records specified in the direction might assist in identifying taxable supplies in respect of which the VAT chargeable might not be paid.

(4) The taxable supplies in question may be supplies made by—

(a) the person named in the direction, or

(b) any other person.

(5) A direction under this paragraph—

(a) must be given by notice in writing to the person named in it,

(b) must warn that person of the consequences under section 69B of failing to comply with it, and

(c) remains in force until it is revoked or replaced by a further direction.

(6) The Commissioners may require any records kept in pursuance of this paragraph to be preserved for such period not exceeding 6 years as they may require.

(7) Sub-paragraph (4) of paragraph 6 (preservation of information) applies for the purposes of this paragraph as it applies for the purposes of that paragraph.

(8) This paragraph is without prejudice to the power conferred by paragraph 6(1) to make regulations requiring records to be kept.

(9) Any records required to be kept by virtue of this paragraph are in addition to any records required to be kept by virtue of paragraph 6.

Of importance is paragraph 6A(3), which is discussed in VATF35220 and VATF35230.

The legal provisions and process with regard to the raising of a penalty for non-compliance are dealt with in VATF35500.