V5.134 Further and supplementary VAT assessments
The amount of tax, penalties, interest or surcharge notified on an assessment may be less than the amount which is properly due. HMRC is entitled to assess the additional amount due under three separate provisions1. A general power applies where the proposed assessment (known as a 'supplementary assessment') is to be made within the two-, four- or 20-year time limits2 specified in relation to particular conduct. A more restrictive power applies where the proposed assessment (frequently referred to as a 'further assessment') is to be made in relation to tax outside the prescribed two-year time limit. Further assessments may also be made in respect of interest and penalties accruing on a daily basis. An assessment may also be increased by way of a tribunal direction in certain circumstances3. These provisions are described below.
HMRC may make a supplementary assessment if4:
• an amount has been assessed in respect of tax, penalties, interest or surcharge, and
• it appears to HMRC that the amount which ought to have been assessed exceeds the amount which was so assessed
HMRC may assess the amount of the excess under the same provision as the original assessment. Alternatively, it may withdraw the original assessment and issue a new assessment for the increased amount5. In either case, the assessment must be made on or before the last day on which the original assessment could have been made6.
The foregoing power does not arise if the increased amount arises as a result
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