Extending DASVOIT to certain VAT group arrangements

HMRC are consulting on draft regulations to extend the scope of the obligations to notify certain VAT group arrangements under the notification of tax avoidance arrangements rules (DASVOIT).

Background

The Finance (No. 2) Act 2017 made provision for the disclosure of tax avoidance schemes for VAT and other indirect taxes. The Act requires specified persons to disclose information to HMRC in relation to arrangements or proposed arrangements that enable, or might be expected to enable, a person to obtain a tax advantage. The duty of such persons to disclose information arises where the arrangements in relation to which they are involved fall within any description prescribed by the Treasury by regulations.

HM Treasury made provision describing the notifiable arrangements in the Indirect Tax (Notifiable Arrangements) Regulations 2017, including, in regulations 5 and 6, VAT avoidance arrangements involving offshore supplies. These provisions apply generally where supplies are made from a UK supplier to an offshore recipient which are then used to make either exempt supplies or supplies not within the scope of UK VAT back into the UK. The rules apply specifically to supplies of insurance and finance services, but also to other arrangements where the place of supply is outside the UK.

The draft regulations

The draft regulations would amend regulations 5 and 6 to extend them to scenarios involving VAT group arrangements. The new rules provide that the conditions within regulations 5 and 6 will be met even where the supply into or out of the UK would otherwise fall to be disregarded by virtue of it being a supply made within a VAT group.

HMRC have become increasingly concerned about VAT group arrangements involving offshore entities in recent years and it is perhaps no surprise that they are now seeking to extend the scope of the disclosure rules to encompass such arrangements.

Comments

Responses to the draft regulations are required by 15 January 2023 and should be sent to ca.consultation@hmrc.gov.uk.

The draft statutory instrument will take effect 21 days after being laid before the House of Commons. Transitional provisions included in the regulations would ensure that no duty to notify will arise where the date for notification would arise before the day on which the regulations come into force.