A person who incorrectly applies the standard or reduced rate of VAT to a supply, which is zero-rated, exempt or outside the scope of VAT, is still liable to account to HMRC for the VAT charged. This is because where an invoice shows a supply with VAT chargeable on it, that VAT is recoverable from the person who issued the invoice (VATA 1994, Sch. 11, para. 5(2) and (3)) When this provision applies, HMRC may recover the amount concerned as a debt to the Crown and not by way of an assessment (Kaur (t/a GK Trading) [1998] BVC 2,143).

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