Measure

VAT - unfulfilled supplies

The measure

The measure will bring pre-payments for goods and services into the scope of VAT where customers have been charged VAT but have either failed to:

  • collect the goods; or
  • use the service.

It will not apply in circumstances where prepayments have been made and customers receive a refund.

  

Who will be affected?

Suppliers who receive pre-payments for their goods and services. 

 

When will the measure come into effect?

The rules will be amended from 1 March 2019.

Our view

The objective of this policy measure appears to be ensuring that where a business has charged VAT on a pre-payment but does not fulfil the supply, it cannot make an adjustment to its VAT account such that the VAT is not paid to HMRC and the amounts collected from the customer are retained.

Contact

Daniel Lyons

Daniel Lyons

Partner

Head of Tax Policy & Indirect Tax Policy Lead