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HMRC internal manual

VAT Supplies in Warehouse and Fiscal Warehousing

HM Revenue & Customs
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Fiscal warehouses: Deficiencies of warehoused goods

Under section 18E of the VAT Act 1994, deficiencies of goods in a fiscal warehouse must be charged with VAT.

The VAT charged should correspond to any VAT that would have been due on the deficient goods if they had been supplied immediately before the absence arose or the deficiency occurred. The assessing provision is found in section 73(7A) of the VAT Act 1994:

73(7A) Where a fiscal warehousekeeper has failed to pay VAT required by the Commissioners under section 18E(2), the Commissioners may assess to the best of their judgment the amount of that VAT due from him and notify it to him

In all cases, the VAT may be deducted as input tax, subject to the normal rules: see V1-13 Input Tax