Vat Split Payments

Concepts

• salford
• banking services
• hmrc
• real-time payment channels
• split payment
• payments
• vat split payments
• technical feasibility of split payment
• extraction of vat
• payments intermediaries

Location

Description

Following the issue of a Request for Information on 16/07/2021, His Majesty's Revenue & Customs ("HMRC") are considering running an Innovation Partnership with a single or multiple suppliers for the development of a proof of concept for the extraction of VAT from payments ("Split Payment") on real-time payment channels and the connected provision of maintenance and consultancy services to (i) maintain the proof of concept over a specified period of time and (ii) to educate the market and policy makers on how the proof of concept works (the "End Services"). This initiative proposes a first potential use for Split Payment in the UK tax sphere. A successful proof of concept could in turn underpin a positive investment appraisal case within HMRC. Our current focus is solely on testing the technical feasibility of Split Payment, but this is a necessary step if HMRC are to quantify the prospects for potential use in tax compliance. Such use may also help in future efforts towards tax modernisation including automated software links between businesses, payments intermediaries and HMRC, and could further smooth and ease taxpayers' experience of tax administration and help them get their VAT right. Seeking to find a mechanism through which VAT is collected from all overseas supplies of goods and services 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'.

CPV Codes

• 66110000 - Banking services
• 66170000 - Financial consultancy, financial transaction processing and clearing-house services
• 72222000 - Information systems or technology strategic review and planning services
• 72227000 - Software integration consultancy services
• 72230000 - Custom software development services
• 72240000 - Systems analysis and programming services
• 72260000 - Software-related services
• 73120000 - Experimental development services

Indicators

• Contract is suitable for SMEs.

Other Information

HMRC are considering launching a procurement procedure in January 2023. However, in advance of any procurement, we would like to undertake further market engagement with interested suppliers, including those from the financial industry and FinTechs, to seek views, among other things, on the proposed procurement process and outline technological requirements for a proof of concept focused on Split Payment, specifically to address VAT non-compliance by non-UK sellers of goods and services. If the proposed procurement is undertaken, we are interested in solutions that are used or are capable of being used in the payment ecosystem. PIN objectives HMRC would appreciate the views of prospective suppliers on the proposed procurement process and outline technological requirements to aid its formulation of any future procurement scope and procedure. Following evaluation of the PIN responses, if HMRC proceeds with the proposed procurement, we intend to use an innovation partnership. Through this procedure we will work with one or multiple suppliers to develop proofs of concept(s) to test Split Payment`s technical feasibility in potentially tackling VAT non-compliance by overseas sellers. The final contract available at the end of the innovation partnership will be for the End Services. Innovation partnership / requirements By using the innovation partnership procurement procedure HMRC can develop solution(s) collaboratively with the bidder(s) that achieve all requirements in the following three Phases: Phase 1 - In the initial phase HMRC would like to test the feasibility of a split occurring when a payment is made by a UK resident to an overseas seller of goods and/ or services. Phase 2 - In the second phase HMRC would like to check what additional information or instructions could trigger the split to occur in response to, for example, a list of compliant or non-compliant sellers, or a binary "split" or "don`t split" instruction from HMRC. Phase 3 - In the final phase HMRC would like to explore possible advanced capabilities that can adapt the splitting mechanism to the complexities of the current UK VAT regime. Among these are: a. the need to identify where it is intended that the purchased goods or services are to be delivered and/ or consumed; b. the possibility to apply a split only above or below a certain value threshold; and c. the feasibility for the splitting mechanism to calculate a composite VAT total across a mixed basket of goods and/ or services, each potentially with a different rate of VAT. To be considered for progression to successive phases, HMRC would require suppliers to first successfully meet the requirements of the previous phase(s). 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 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 sapariba.hmrcsupport@hmrc.gsi.gov.uk (after first checking your spam in-box) confirming when your registration request was first made. Once you have obtained 'your organization's account ID' number, please email james.power1@hmrc.gov.uk and copy in e.procurement@hmrc.gov.uk with your account ID number, you will then receive an e-mail confirming access. Further information about HMRC's procurement tool SAP Ariba, Suppliers Guide and general information 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.