Value Added Tax Act 1994, section 72

Offences

Part IV Administration, collection and enforcement

(1)If any person is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of VAT by him or any other person, he shall be liable—

(a)on summary conviction, to a penalty of [F574the statutory maximumF574][F574 £20,000F574] or of three times the amount of the VAT, whichever is the greater, or to imprisonment for a term not exceeding 6 months or to both; or

(b)on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding [F57514F575] years or to both.

(2)Any reference in subsection (1) above or subsection (8) below to the evasion of VAT includes a reference to the obtaining of—

(a)the payment of a VAT credit; or

(b)a refund under section [F57635 or 36F576] of this Act or section 22 of the 1983 Act; or

F577(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)a repayment under section 39;

and any reference in those subsections to the amount of the VAT shall be construed—

(i)in relation to VAT itself or a VAT credit, as a reference to the aggregate of the amount (if any) falsely claimed by way of credit for input tax and the amount (if any) by which output tax was falsely understated, and

(ii)in relation to a refund or repayment falling within paragraph [F578(b) or (d)F578] above, as a reference to the amount falsely claimed by way of refund or repayment.

(3)If any person—

(a)with intent to deceive produces, furnishes or sends for the purposes of this Act or otherwise makes use for those purposes of any document which is false in a material particular; or

(b)in furnishing any information for the purposes of this Act makes any statement which he knows to be false in a material particular or recklessly makes a statement which is false in a material particular,

he shall be liable—

(i)on summary conviction, to a penalty of [F579the statutory maximumF579][F579 £20,000F579] or, where subsection (4) or (5) below applies, to the alternative penalty specified in that subsection if it is greater, or to imprisonment for a term not exceeding 6 months or to both; or

(ii)on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding [F58014F580] years or to both.

(4)In any case where—

(a)the document referred to in subsection (3)(a) above is a return required under this Act, or

(b)the information referred to in subsection (3)(b) above is contained in or otherwise relevant to such a return,

the alternative penalty referred to in subsection (3)(i) above is a penalty equal to three times the aggregate of the amount (if any) falsely claimed by way of credit for input tax and the amount (if any) by which output tax was falsely understated.

(5)In any case where—

(a)F582the document referred to in subsection (3)(a) above is a claim for a refund under section [F58135 or 36F581] of this Act or section 22 of the 1983 Act, ... or for a repayment under section 39, or

(b)the information referred to in subsection (3)(b) above is contained in or otherwise relevant to such a claim,

the alternative penalty referred to in subsection (3)(i) above is a penalty equal to 3 times the amount falsely claimed.

(6)The reference in subsection (3)(a) above to furnishing, sending or otherwise making use of a document which is false in a material particular, with intent to deceive, includes a reference to furnishing, sending or otherwise making use of such a document, with intent to secure that a machine will respond to the document as if it were a true document.

(7)Any reference in subsection (3)(a) or (6) above to producing, furnishing or sending a document includes a reference to causing a document to be produced, furnished or sent.

(8)Where a person’s conduct during any specified period must have involved the commission by him of one or more offences under the preceding provisions of this section, then, whether or not the particulars of that offence or those offences are known, he shall, by virtue of this subsection, be guilty of an offence and liable—

(a)on summary conviction, to a penalty of [F583the statutory maximumF583][F583 £20,000F583] or, if greater, 3 times the amount of any VAT that was or was intended to be evaded by his conduct, or to imprisonment for a term not exceeding 6 months or to both, or

(b)on conviction on indictment to a penalty of any amount or to imprisonment for a term not exceeding [F58414F584] years or to both.

F585(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10)F586,F587If any person acquires possession of or deals with any goods, or accepts the supply of any services, having reason to believe that VAT on the supply of the goods or services... or on the importation of the goods ... has been or will be evaded, he shall be liable on summary conviction to a penalty of [F588level 5 on the standard scaleF588][F588 £20,000F588] or three times the amount of the VAT, whichever is the greater.

(11)If any person supplies [F589or is supplied withF589] goods or services in contravention of paragraph 4(2) of Schedule 11, he shall be liable on summary conviction to a penalty of [F590level 5 on the standard scaleF590][F590 £20,000F590] .

(12)Subject to subsection (13) below, sections 145 to 155 of the Management Act (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences under this Act (which include any act or omission in respect of which a penalty is imposed) and penalties imposed under this Act as they apply in relation to offences and penalties under the customs and excise Acts as defined in that Act; and accordingly in section 154(2) as it applies by virtue of this subsection the reference to duty shall be construed as a reference to VAT.

(13)In subsection (12) above the references to penalties do not include references to penalties under sections 60 to 70.

Definitions used in section 72 12

VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act
subsection (1) above

(a) the reference in subsection (2) to “subsection (1) above” were to “subsection (1) and paragraph 24(1) of Schedule 9ZA”;

Defined in Sch.9ZA para.24(2) · see it in the full Act

(b) the reference in subsection (2A) to “subsection (1) above” were to “subsection (1) or paragraph 24(1) of Schedule 9ZA”.

Defined in Sch.9ZA para.24(2) · see it in the full Act
VAT credit

(3) If either no output tax is due at the end of the period, or the amount of the credit exceeds that of the output tax then, subject to subsections (4) and (5) below, the amount of the credit or, as the case may be, the amount of the excess shall be paid to the taxable person by the Commissioners; and an amount which is due under this subsection is referred to in this Act as a “VAT credit”.

Defined in s.25(3) · see it in the full Act

“VAT credit” has the meaning given by section 25(3);

Defined in s.96(1) · see it in the full Act
the 1983 Act

“the 1983 Act” means the Value Added Tax Act 1983 ;

Defined in s.96(1) · see it in the full Act
the credit

(4A) Subsection (3) above shall not require any such amount as is mentioned in paragraph (a) of that subsection (“the credit”) to be set against any such sum as is mentioned in paragraph (b) of that subsection (“the debit”) in any case where—

(a)an insolvency procedure has been applied to the person entitled to the credit;

(b)the credit became due after that procedure was so applied; and

(c)the liability to pay the debit either arose before that procedure was so applied or (having arisen afterwards) relates to, or to matters occurring in the course of, the carrying on of any business at times before the procedure was so applied.

Defined in s.81(4A) · see it in the full Act
input tax

“input tax” has the meaning given by section 24;

Defined in s.96(1) · see it in the full Act
output tax

“output tax” has the meaning given by section 24;

Defined in s.96(1) · see it in the full Act
document

“document” means anything in which information of any description is recorded; and

Defined in s.96(1) · see it in the full Act
relevant

(b) when specifying a body under paragraph (a), specify any museum or gallery that, for the purposes of this section, is a “relevant” museum or gallery in relation to the body;

Defined in s.33A(9) · see it in the full Act
the preceding provisions of this section

(6) Section 7 has effect as if the references in subsections (5A) to (7) to “the preceding provisions of this section” included sub-paragraphs (1) and (2) of this paragraph.

Defined in Sch.9ZB para.29(6) · see it in the full Act
supplied

(3) In sub-paragraph (2), “supplied” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act ).

Defined in Sch.7A para.A1 · see it in the full Act

(3) In sub-paragraph (2), “supplied” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act ).

Defined in Sch.8 para.3 · see it in the full Act
the Management Act

“the Management Act” means the Customs and Excise Management Act 1979 ;

Defined in s.96(1) · see it in the full Act

Cases considering section 72 15

Total Network SL (a company incorporated in Spain) (Original Respondents and Cross-appellants) v Her Majesty's Revenue and Customs (suing as Commissioners of Customs and Excise) (Original Appellants and Cross-respondents)

[2008] UKHL 19 · 12 March 2008Defines

Knowingly participating in fraudulent VAT evasion is a criminal offence. The criminal remedy could coexist with the common law offence of cheating the revenue and did not supply compensation against Total (see paras [15]; [137]). The extended definition of VAT evasion includes obtaining payment of a falsely claimed input-tax credit (see para [150]).

R v Muhammad Farqan Farooka & Anor

[2024] EWCA Crim 1245 · 9 May 2024Interprets

Interprets the offence of being knowingly concerned in, or taking steps with a view to, fraudulent evasion of VAT. The provision covers dishonest conduct directed at obtaining a VAT credit, subject to the statutory definition of evasion in section 72(2). (see paras [33]; [35]–[37]) Interprets “evasion” as including the obtaining of a VAT credit and, for a VAT credit, treats the amount of VAT as the aggregate amount falsely claimed by way of input-tax credit. The prosecution need not prove an overall net VAT liability exceeding the credit claimed. (see paras [34]–[37]) Applies the provision by holding that dishonest steps to obtain a VAT credit amount to evasion of VAT. The prosecution was not required to prove that the company had no other entitlement to repayment. (see paras [35]–[37]) Interprets the amount of VAT, in relation to a VAT credit, as the aggregate amount falsely claimed by way of credit for input tax. That construction made the company’s overall VAT position immaterial to the charged offence. (see para [35])

Coudrat v HM Revenue & Customs

[2005] EWCA Civ 616 · 26 May 2005Interprets

The court treated section 72 as the statutory group of VAT-evasion offences relevant to the charge, and construed the operative subsections separately (see paras [43]–[45]). The court held that the underlying offence required prima facie evidence that the appellant knowingly took steps with a view to fraudulent VAT evasion. Knowledge could be established by circumstantial evidence (see paras [44]–[46]; [52]). The court construed the provision as permitting a charge where conduct during a specified period must have involved one or more underlying section 72 offences, even if the particular acts and dates cannot be identified. It required prima facie evidence of knowing steps to further fraudulent VAT evasion (see paras [43]–[46]).

What each judgment says about section 72 is in the case-law panel in the full Act.

Amendments and notes

18 notes from legislation.gov.uk

Amendments

  1. F574Sum in s. 72(1)(a) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 8(2) (with reg. 5(1))
  2. F575Words in s. 72(1)(b) substituted (22.2.2024) by Finance Act 2024 (c. 3), s. 32(1) (with s. 32(6))
  3. F576Words in s. 72(2)(b) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(2)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  4. F577S. 72(2)(c) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(2)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  5. F578Words in s. 72(2)(d)(ii) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(2)(c) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  6. F579Sum in s. 72(3)(i) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 8(3) (with reg. 5(1))
  7. F580Words in s. 72(3)(b)(ii) substituted (22.2.2024) by Finance Act 2024 (c. 3), s. 32(1) (with s. 32(6))
  8. F582Words in s. 72(5)(a) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(3)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  9. F581Words in s. 72(5)(a) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(3)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  10. F583Sum in s. 72(8)(a) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 8(4) (with reg. 5(1))
  11. F584Words in s. 72(8)(b) substituted (22.2.2024) by Finance Act 2024 (c. 3), s. 32(1) (with s. 32(6))
  12. F585S. 72(9) repealed (8.11.2007) by Finance Act 2007 (c. 11), s. 84(4)(5), Sch. 22 para. 8(a), Sch. 27 Pt. 5(1); S.I. 2007/3166, art. 2(c)
  13. F586Words in s. 72(10) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(4)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  14. F587Words in s. 72(10) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 63(4)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  15. F588Sum in s. 72(10) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 8(5) (with reg. 5(1))
  16. F589Words in s. 72(11) inserted (retrospective to 10.4.2003) by Finance Act 2003 (c. 14), s. 17(5)(8)
  17. F590Sum in s. 72(11) substituted for words (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 2 para. 8(6) (with reg. 5(1))

Modifications

  1. C52S. 72 applied (with modifications) (1.5.2023) by The Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-related Payments) Order 2023 (S.I. 2023/68), arts. 1(1), 13 (with art. 1(2))