The UK tax authority, HM Revenue and Customs (HMRC) has released new guidance on the Notification of Vehicle Arrivals (NOVA) online system, introduced on April 15, 2013, aimed at tackling VAT evasion on new vehicles, and vehicles brought permanently into the UK from another EU member state or from outside the EU.
NOVA is an online system which enables customers (VAT-registered businesses, non-VAT registered businesses and private individuals) to notify HMRC about vehicle arrivals into the UK from abroad. It replaces a number of HMRC VAT and Customs paper forms.
NOVA was introduced to tackle VAT evasion on vehicles brought permanently into the UK. Before the introduction of NOVA, as part of its license and registration procedures, the Driver and Vehicle Licensing Agency (DVLA) requested evidence to show that the VAT had been paid or would be accounted for. Without such evidence, the DVLA was entitled to refuse an application. However, the absence of real-time information about vehicles brought into the UK, especially in respect of vehicles arriving from other EU Member States, has been exploited by fraudsters, who were able to present the paper forms to the DVLA before the VAT had been secured by HMRC. This resulted in significant amounts of revenue due to the Exchequer being lost, as well as undercutting legitimate trade.
NOVA will tackle VAT evasion by capturing and processing all notifications made in respect of land vehicles brought permanently into the UK from abroad. This will allow the DVLA, on receipt of an application to register and license a vehicle, to check that HMRC has assessed as secure any VAT due on the vehicle.
In practice this means that information about the vehicle and the person or business bringing the vehicle into the UK will need to be submitted online into NOVA. Alternatively, a paper form can be completed which will then be entered onto the NOVA system by HMRC staff. NOVA will check the information provided in order to, for example, determine whether VAT is due, verify the declared value of vehicles or compare the import entry details provided against information held on other HMRC systems.
Once the notification has been successfully processed by HMRC, the customer will be informed that they can apply to register and license the vehicle with the DVLA. When such an application is received, the DVLA will use NOVA to check that a notification has been made to, and processed by, HMRC for that vehicle. If the check fails, the DVLA will refuse the application and notify HMRC.
Comprehensive guidance on the regime is set out in VAT Info Sheet 06/13, released on June 25, 2013.