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HMRC internal manual

VAT Joint and Several Liability

Making a case for applying the JSL measure: The Notification Letter

When sections 1 to 8 of the authorisation procedure template (JSL5050) have been completed and the VAT Fraud Team (JSL5100) has endorsed the form, then IST (JSL5100) should prepare a Notification Letter which will need to be issued by the case officer.

The Notification Letter specifies that HMRC believes the taxable person is jointly and severally liable for the unpaid VAT. It gives the taxable person 21 days to explain why he thinks he should not be held jointly and severally liable or bring to our attention any other factors, which he may wish us to take into consideration. The letter explains the amount HMRC considers the taxable person to be liable for and the other taxable persons that HMRC considers are also jointly and severally liable for the same unpaid VAT.

The case officer should issue the Notification Letter, either by serving the letter in person or by recorded delivery.

Once the Notification Letter has been issued the taxable person will have 21 days from the date of the letter to respond:

  1. explaining why he thinks he should not be held jointly and severally liable; and/or
  2. to detail the commercial steps he undertook prior to entering into the supply chain; and/or
  3. to bring our attention any other factors that may need to be considered.

Some examples of a reasonable explanation are as follows: -

  • bulk reductions of prices;
  • price dumping or price reductions as a result of developments in technological trends or innovations;
  • reductions in price due to fire sales.

The case officer should consider any response from the taxable person including supporting evidence. At the end of the 21-day period, they should complete section 9 of the authorisation form summarising their recommendation.

If the case officer considers there is a reasonable excuse or the taxable person has:

  • demonstrated that he has genuinely done everything he could reasonably be expected to do to check the integrity of the supply chain;
  • taken heed of any indications that VAT may go unpaid; and
  • no other reason to suspect that VAT may go unpaid,

then they should recommend that the measure should not be pursued.

If, however, the taxable person does not respond to the Notification Letter within the 21 day period or the taxable person has not been able to provide a reasonable explanation in his response, then the case officer should recommend to IST that the measure is implemented.

The case officer’s line manager should then complete section 10 of the authorisation procedure template and then send it to .