Request for Information VAT Split Payments

HM Revenue & Customs (HMRC) invites suppliers, including those from the financial industry and FinTechs, to share information on the possibility of extracting VAT from payments (Split Payment), to address VAT non-compliance by non-UK based goods and service sellers.

This is a first use case for Split Payment, and a successful Proof of Concept demonstration has the potential to unlock the path toward its use for digitally automated tax modernisation. Automation that might stem from future enhanced client services by payment intermediaries - integrating with business systems and software to support a smoother, easier experience for compliant taxpayers. Seeking to shape a mechanism through which the UK consumption of overseas supplied goods or services irresistibly attracts VAT is part of HMRC's commitment to uphold fairness in the tax system. This aligns with HMRC's strategic objective to 'maintain taxpayers' consent through fair treatment and protect society from harm'.

Our interest is in how a split payment technique could be shaped to extract VAT from UK buyers' payments to non-compliant overseas sellers. We are interested in solutions that use current and emerging capabilities within the payment ecosystem. This is on a working presumption that VAT would have to apply to the non-compliant at a flat rate.

HMRC would therefore like suppliers with knowledge of the subject to provide their views on the technological feasibility of building a Split Payment mechanism for VAT, focused on non-UK based sellers of goods and services selling into the UK. Views are welcomed on the prerequisites for a targeted use of such a mechanism against VAT non-compliance.

We are open to collaborative ideas that draw on the capabilities of HMRC, to assist with such targeted deployment. We are also interested in the extent to which data within the payment ecosystem answers the challenge.

Through this RfI we aim to understand how HMRC can leverage its own capabilities and knowledge, together with those within the payment ecosystem. Following evaluation of the responses to this RfI HMRC may move to a Proof of Concept demonstrator stage to test the feasibility of a possible mechanism for tackling overseas seller VAT non-compliance. This will help to establish the investment appraisal grounds for split payment within HMRC (as a first use case), and as a prelude to the broader question of how split payment might influence tax modernisation

This Request for Information (RfI) will be open for 2 weeks commencing 16/07/2021 and closing on 30/07/2021, suppliers interested in participating should register with the HMRC eSourcing tool Mybuy (Ariba), where additional information can be found and a series of Questions designed to inform our view on the viability of the proposition are provided. There will be the ability to seek any necessary clarification via the messaging tool contained within the RfI, we will endeavour to answer as many as possible

Additional information: HMRC invite interested parties to register using the guidance below to contribute your views on this topic.

This requirement will be met by an eSourcing RfI using HMRC SAP Ariba. Please can you ensure you are registered with the HMRC SAP Ariba to gain access to the RfI documentation which will contain full details.

If you are not already registered, the registration link is: http://hmrc.supplier-eu.ariba.com/ad/register/SSOActions?type=full

As part of the registration process you will receive a system generated email asking you to activate your SAP Ariba supplier account by verifying your email address. Once you have completed the activation process you will receive a further email by return confirming the 'registration process is now complete' and providing you with 'your organisation's account ID' number. If an email response from HMRC is not received within one working day of your request, please re-contact [email protected] (after first checking your spam in-box) notifying non-receipt and confirming when your registration request was first made.

Once you have obtained 'your organization's account ID' number, please email [email protected] and copy in [email protected] with your account ID number. Once you have complied with the foregoing you will receive an e-mail confirming access to the RfI. Further information about HMRC's procurement tool SAP Ariba, a Suppliers Guide and general information about supplying to HMRC is available on the HMRC website: www.hmrc.gov.uk/about/supplying.htm If you have already registered on SAP Ariba then you may also need to re-register on HMRC's SAP Ariba in order to be added to the event.