V5.131 HMRC's powers to assess for VAT
HMRC is empowered to assess the amount due from a person and is required to notify such amount to him1. Assessments made under VATA 1994, ss 73(1) (failure to make returns, etc) and 75(1) (certain acquisitions by non-taxable persons) are made for 'the amount of VAT due'.
The 'amount of VAT due' does not include amounts recoverable by HMRC under VATA 1994, Sch 11, para 5(2), (3) (amounts shown on invoice purporting to be VAT) if it would not otherwise be VAT. Such amounts may be recoverable as a debt due to the Crown2.
In a case3 concerning a taxpayer who was part of a conspiracy to defraud HMRC, sham invoices were issued both to and by him in respect of fictitious supplies of gold. When HMRC discovered the conspiracy it assessed the taxpayer under VATA 1983, Sch 7, para 4(1)4 in respect of the input tax wrongly credited to him. The taxpayer appealed contending that the amount of output tax declared by him should be taken into account. The tribunal allowed the appeal, but for a different reason; since there had been no supplies or purchases at all, there was no VAT which could be assessed. Both the amounts declared as output tax and claimed as input tax had to be disregarded for the purposes of an assessment. The fact that HMRC might nevertheless have recovered the amount shown as VAT on invoices issued by the taxpayer5 could not validate an