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HMRC internal manual

VAT Joint and Several Liability

HM Revenue & Customs
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Legislation: Presumption

Provided that a fraudulent tax loss has been established in the same supply chain (JSL4200), this measure can automatically apply in the circumstances where the taxable person has purchased the specified goods at less than the:

  • lowest open market value of the goods; or
  • price payable for them by any previous supplier.

In these circumstances the taxable person is presumed to have reasonable grounds for suspecting that the VAT on the supply would go unpaid. However, the legislation does allow for the taxable person to rebut these presumptions by evidencing that the low purchase price of the goods was not connected with the deliberate failure to pay VAT (known as ‘rebuttable presumptions’).

Given the way in which MTIC fraud has mutated, it is unlikely that these presumptions are particularly relevant now. However, the changes in the 2007 Budget mean that the presumptions can be quickly extended or altered by way of secondary legislation.

However, section 77A (JSL2100) provides that we can also establish reasonable grounds for suspicion in any other way. It is by this route (which is similar to the Kittel principle, which is dealt with in section VATF50000 of the VAT Fraud guidance manual) that a case will most commonly be made to apply the JSL measure.