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HMRC internal manual

VAT Joint and Several Liability

Debt recovery and appeals: Debt recovery

In all cases where we issue a Notice of Liability (JSL5200), HMRC will seek to recover the amount that has gone unpaid in full.

IST will use normal debt recovery options to pursue and collect the debts, working with the DMB MTIC Co-ordination Team, situated in Northampton, ensuring that we do not recover sums in excess of the amounts gone unpaid or that the action does not result in double recovery. They are the single point of contact for enquiries relating to indirect and direct tax debts in MTIC related cases for DMB, Solicitor’s Office or MTIC teams alike. They will identify other debts in MTIC cases and assume responsibility for those debts.

During the course of progressing a joint and several liability case, IST will continually check that no conflicting debt recovery action is being taken against the missing/defaulting taxable person that could potentially result in the double recovery of the unpaid output tax.

In circumstances where we are required to account for any payment/offset of any VAT credit against another legal entity, any monies recovered from a taxable person that has been made jointly and severally liable should be accounted for against the debt of the defaulting taxable person’s VAT account. If a payment is allocated in error to another VAT account (e.g. the VAT account of a trader made jointly and severally liable), then the payment needs to be transferred to the correct account in line with the instructions below.

If a VAT claim has been submitted by a taxable person who has been held jointly and severally liable and the claim has been accepted as valid by HMRC, the claim can be offset against the debt of the defaulting taxable person without the taxable person’s permission. Remember this action should not be taken whilst the VAT claim is still under verification.

The case officer should use Form VAT 915 (request for accounting adjustment) to reallocate payment or offset verified VAT claims. Complete Section A, Section B (selecting Option 8) and Section C stating in the reason for transfer:

‘MTIC JSL trader, therefore no written authority required’

The completed form should be scanned and forwarded to Accounting and Adjustment index team at 360 A&A on Electronic Folder.