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HMRC internal manual

VAT Joint and Several Liability

Application of the JSL measure: Suitable and unsuitable cases


This measure is one that can be applied anywhere along the supply chain - to taxable persons in the middle (‘buffers’) as well as to those at the end (‘broker’). It can also be applied to more than one taxable person in that same supply chain. However, we can only collect one amount of unpaid tax, so once that has been done the other taxable persons can no longer be jointly and severally liable and those Notices of Liability (JSL5200) would need to be withdrawn.

You might also consider using this measure where it is not possible to deny a broker’s input tax claim using the Kittel principle (see section VATF50000 of the VAT Fraud guidance manual). In these circumstances it might be appropriate to apply the JSL measure against one or more of the buffers in that supply chain.

In any case where you are considering using the JSL measure (JSL4000), you will need to establish what action (if any) is being taken elsewhere in that supply chain. For example, if denying the broker’s input tax under the Kittel principle (which requires fraudulent evasion of VAT) is being considered, applying, enforcing and recovering a JSL notice against a buffer will result in there no longer being a tax loss.

It is possible to use this measure against the contra-trader in its capacity as the broker in the actual tax loss chain but not against buffers or brokers in the contra chain (see below).

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It may also be the case that IST (JSL1320) has taken action against the missing/defaulting taxable person to recover the unpaid VAT. If there is no longer a debt for unpaid VAT on file or IST is in the process of taking action to recover that debt, then JSL action is not appropriate.

Furthermore, this measure cannot be used against buffers or brokers in contra chains (see section VATF23550 of the VAT Fraud guidance manual). This is because the tax loss has to be in the actual chain of supply.

In addition, the measure must not be applied in the following circumstances:

  • the VAT went unpaid due to genuine bad debts; or
  • the VAT went unpaid due to genuine business failure; or
  • the taxable person purchased the goods for their own use rather than onward sale; or
  • where we are satisfied that the trader has genuinely done everything they could to check the integrity of the supply chain and had no other reason to suspect that VAT would go unpaid.