Value Added Tax Act 1994, section 76

Assessment of amounts due by way of penalty, interest or surcharge penalty

Part IV Administration, collection and enforcement

(1)Where any person is liable—

[F605 (a)to a surcharge under section 59 [F606 or 59AF606] orF605]

(b)to a penalty under any of sections 60 [F607to 69CF607] , or

F608(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F609 (d)a penalty under regulations made under section 135 of the Finance Act 2002 (mandatory electronic filing of returns) in connection with VAT,F609]

the Commissioners may, subject to subsection (2) below, assess the amount due by way of [F610penalty, interest or surchargeF610][F610 penalty F611...F610] , as the case may be, and notify it to him accordingly; and the fact that any conduct giving rise to a penalty under any of sections 60 [F612to [F613 69BF613,F612]] [F614 or the regulationsF614] may have ceased before an assessment is made under this section shall not affect the power of the Commissioners to make such an assessment.

(2)Where a person is liable to a penalty under section 69 for any failure to comply with such a requirement as is referred to in subsection (1)(c) to (f) of that section, no assessment shall be made under this section of the amount due from him by way of such penalty unless, within the period of 2 years preceding the assessment, the Commissioners have issued him with a written warning of the consequences of a continuing failure to comply with that requirement.

(3) In the case of the [F615 penalties, interest and surcharge F615][F615 penalties F616 ... F615] referred to in the following paragraphs, the assessment under this section shall be of an amount due in respect of the prescribed accounting period which in the paragraph concerned is referred to as “the relevant period”—

[F617 (a)in the case of a surcharge under section 59 [F618 or 59AF618] , the relevant period is the prescribed accounting period in respect of which the taxable person is in default and in respect of which the surcharge arises;F617]

(b)in the case of a penalty under section 60 relating to the evasion of VAT, the relevant period is the prescribed accounting period for which the VAT evaded was due;

(c)in the case of a penalty under section 60 relating to the obtaining of the payment of a VAT credit, the relevant period is the prescribed accounting period in respect of which the payment was obtained;

(d)F619in the case of a penalty under section 63, the relevant period is the prescribed accounting period for which liability to VAT was understated or, as the case may be, for which entitlement to a VAT credit was overstated; ...

F620(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F621 (f)in the case of a penalty under regulations made under section 135 of the Finance Act 2002, the relevant period is the prescribed accounting period in respect of which the contravention of, or failure to comply with, the regulations occurredF621] .

F622(3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In any case where the amount of any [F623penalty, interest or surchargeF623][F623 penalty F624...F623] falls to be calculated by reference to VAT which was not paid at the time it should have been and that VAT (or the supply which gives rise to it) cannot be readily attributed to any one or more prescribed accounting periods, it shall be treated for the purposes of this Act as VAT due for such period or periods as the Commissioners may determine to the best of their judgment and notify to the person liable for the VAT and [F623penalty, interest or surchargeF623][F623 penalty F624...F623] .

(5)F627,F627Where a person is assessed under this section to an amount due by way of any [F625penalty, interest or surchargeF625][F625 penalty F626...F625] falling within subsection (3) ... above and is also assessed under section 73(1), (2) [F628,(7), (7A) or (7B)F628] for the prescribed accounting period which is the relevant period under subsection (3) ... above, the assessments may be combined and notified to him as one assessment, but the amount of the [F625penalty, interest or surchargeF625][F625 penalty F626...F625] shall be separately identified in the notice.

F629(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)F630In the case of an amount due by way of penalty under section 66 or 69 ...—

(a)F631a notice of assessment under this section shall specify a date, being not later than the date of the notice, to which the aggregate amount of the penalty which is assessed ... is calculated; and

(b)F632if the penalty ... continues to accrue after that date, a further assessment or assessments may be made under this section in respect of amounts which so accrue.

(8)F633If, within such period as may be notified by the Commissioners to the person liable to a penalty under section 66 or 69 ...—

(a)F634a failure or default falling within section 66(1) or 69(1) is remedied, ...

F634(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F635it shall be treated for the purposes of section 66 or 69 ... as paid or remedied on the date specified as mentioned in subsection (7)(a) above.

(9)If an amount is assessed and notified to any person under this section, then unless, or except to the extent that, the assessment is withdrawn or reduced, that amount shall be recoverable as if it were VAT due from him.

(10)For the purposes of this section, notification to a personal representative, trustee in bankruptcy, [F636trustee in sequestrationF636] , receiver, liquidator or person otherwise acting in a representative capacity in relation to the person who made the acquisition in question shall be treated as notification to the person in relation to whom he so acts.

Definitions used in section 76 10

regulations

“regulations” means regulations made by the Commissioners under this Act;

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

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

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

“the Commissioners” means the Commissioners of Customs and Excise;

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

account for and pay VAT by reference to such periods (in this Act referred to as “prescribed accounting periods”) at such time and in such manner as may be determined by or under regulations and regulations may make different provision for different circumstances.

Defined in s.25(1) · see it in the full Act
prescribed accounting period

“prescribed accounting period” has the meaning given by section 25(1);

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

(b) the “relevant period” in relation to a failure to comply with paragraph 44(2) of this Schedule is the period beginning on the date of the change or alteration concerned and ending on the date on which HMRC received notification of, or otherwise became fully aware of, that change or alteration.

Defined in Sch.9ZA para.78(4) · see it in the full Act

“relevant period”, in relation to relevant premises, means 10 years beginning with the day on which the relevant premises are completed.

Defined in Sch.10 para.35(2) · see it in the full Act
taxable person

“taxable person” means a person who is a taxable person under section 3;

Defined in s.96(1) · 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
notification

“notification” means written notification, and

Defined in Sch.10 para.34(1) · see it in the full Act
trustee in sequestration

“trustee in sequestration” means a trustee (or interim trustee) in a sequestration under the Bankruptcy (Scotland) Act 2016

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

Cases considering section 76 8

Musashi Autoparts Europe Ltd. v Customs & Excise

[2003] EWCA Civ 1738 · 3 December 2003Interprets

Empowers the Commissioners to assess interest due under section 74. The interest assessment formed part of the valid assessments challenged by the taxpayer. (see para [38]) Characterises an interest assessment as an assessment of an amount due for the prescribed period in which the VAT was due. The Court used that period-specific structure in upholding the continuing interest liability. (see para [38]) Allows VAT and interest assessments to be combined in one notice, while requiring the interest element to be separately identified. The Court noted this as part of the statutory assessment mechanism. (see para [38])

MJL Contracts Limited v The Commissioners for HMRC

[2023] UKUT 254 (TCC) · 17 October 2023Interprets

The Tribunal held that assessment under this provision fixes the amount due and need not involve an individual officer’s mental process. HMRC may make assessment arrangements generically and automate the process (see paras [31]-[36]).

Ali (t/a Vakas Balti) v Revenue & Customs

[2006] EWHC 23 (Ch) · 23 January 2006Interprets

Confirms that Customs may assess and notify a civil penalty, but the penalty must be calculated by reference to the VAT lawfully relevant under the statutory scheme. (see paras [43]–[46]) Interprets the relevant period for a section 60 penalty as the prescribed accounting period in respect of which the evaded VAT was due. This supported reducing the penalty to exclude VAT exceeding the valid assessment for that period. (see paras [43], [45]–[46]) Confirms that a civil penalty assessment may be combined with a VAT assessment, but the penalty amount must be separately identified. (see para [43])

What each judgment says about section 76 is in the case-law panel in the full Act.

Amendments and notes

40 notes from legislation.gov.uk

Amendments

  1. F603Words in s. 76 heading substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(2); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  2. F604Words in s. 76 heading omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(a)
  3. F605S. 76(1)(a) omitted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by virtue of Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(3)(a); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text omitted for certain specified purposes only, see the commentary.
  4. F606Words in s. 76(1)(a) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 67(2) (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. F607Words in s. 76(1)(b) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 68(4)
  6. F608S. 76(1)(c) and word omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(b)(i)
  7. F609S. 76(1)(d) and word inserted (19.7.2007) by Finance Act 2007 (c. 11), s. 93(5)
  8. F610Words in s. 76(1) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(3)(b); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  9. F611Words in s. 76(1) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(b)(ii)
  10. F612Words in s. 76(1) substituted (28.7.2000) by 2000 c. 17, s. 137(4)
  11. F613Word in s. 76(1) substituted (19.7.2006) by Finance Act 2006 (c. 25), s. 21(3)
  12. F614Words in s. 76(1) inserted (19.7.2007) by Finance Act 2007 (c. 11), s. 93(6)
  13. F615Words in s. 76(3) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(4)(a); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  14. F616Words in s. 76(3) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(c)(i)
  15. F617S. 76(3)(a) omitted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by virtue of Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(4)(b); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text omitted for certain specified purposes only, see the commentary.
  16. F618Words in s. 76(3)(a) substituted (29.4.1996 with effect as mentioned in s. 35(8) of the amending Act) by 1996 c. 8, s. 35(7)(8)
  17. F619Word in s. 76(3)(d) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 27 Pt. 5(4)
  18. F620S. 76(3)(e) and word omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(c)(ii)
  19. F621S. 76(3)(f) and word inserted (19.7.2007) by Finance Act 2007 (c. 11), s. 93(7)
  20. F622S. 76(3A) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 67(3) (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.
  21. F623Words in s. 76(4) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(5); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  22. F624Words in s. 76(4) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(d)
  23. F627Words in s. 76(5) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 67(4) (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.
  24. F625Words in s. 76(5) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 20(6); S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  25. F626Words in s. 76(5) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(e)
  26. F628Words in s. 76(5) inserted (1.6.1996 with application to any acquisition of goods from another member State and any supply taking place on or after that day) by 1996 c. 8, ss. 25, 26, Sch. 3 para. 11; S.I. 1996/1249, art. 2
  27. F629S. 76(6) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 67(5) (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.
  28. F630Words in s. 76(7) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(f)(i)
  29. F631Words in s. 76(7)(a) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(f)(ii)
  30. F632Words in s. 76(7)(b) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(f)(iii)
  31. F633Words in s. 76(8) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(g)(i)
  32. F634S. 76(8)(b) and word omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(g)(ii)
  33. F635Words in s. 76(8) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(3)(g)(iii)
  34. F636Words in s. 76(10) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 12(4)

Modifications

  1. C54S. 76 modified (31.12.2020) by The Value Added Tax (Northern Ireland) (EU Exit) Regulations 2020 (S.I. 2020/1546), regs. 1, 18 (with reg. 15); S.I. 2020/1641, reg. 2, Sch.
  2. C55S. 76(1)-(8) excluded (1.4.2004) by The Recovery of Duties and Taxes Etc. Due in Other Member States (Corresponding UK Claims, Procedure and Supplementary) Regulations 2004 (S.I. 2004/674), reg. 1, Sch. 2 para. 3(1)
  3. C56S. 76(9) applied (with modifications) (1.4.2004) by The Recovery of Duties and Taxes Etc. Due in Other Member States (Corresponding UK Claims, Procedure and Supplementary) Regulations 2004 (S.I. 2004/674), reg. 1, Sch. 2 para. 3(2)
  4. C57S. 76(9) restricted (1.4.2004) by The Recovery of Duties and Taxes Etc. Due in Other Member States (Corresponding UK Claims, Procedure and Supplementary) Regulations 2004 (S.I. 2004/674), reg. 1, Sch. 2 para. 3(1)
  5. C58S. 76(10) amended (retrospectively) by 1997 c. 16, s. 45(6)
  6. C59S. 76(10) excluded (1.4.2004) by The Recovery of Duties and Taxes Etc. Due in Other Member States (Corresponding UK Claims, Procedure and Supplementary) Regulations 2004 (S.I. 2004/674), reg. 1, Sch. 2 para. 3(1)