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HMRC internal manual

VAT Fraud

Basic interventions: Other interventions: Joint & Several Liability (JSL) measure

A trader can be made jointly and severally liable for the unpaid VAT of another VAT-registered business in the same supply chain if it buys and/or sells specified goods and that trader ‘knew’ or ‘had reasonable grounds to suspect’ that the VAT on the supply, or any previous or subsequent supply, of those goods would go unpaid to HMRC.

HMRC was challenged at the European Court of Justice on the legality of the JSL measure, which found it to be legal (see Federation of Technology Industries & Others (C384/04, released on 11 May 2006)).

In the 2007 Budget, the list of specified goods to which JSL applies was extended. HMRC’s published policy in respect of joint and several liability can be found in Notice 726 Joint and several liability for unpaid VAT, as well as the Joint & Several Liability (JSL) guidance manual.