Underdeclaration of tax

V5.261 Assessments

HMRC is empowered to issue an assessment where they consider that a trader's return(s) are incomplete or incorrect1. HMRC does not have to establish precisely what a trader has done wrong before they can truthfully say that it appears to them that the trader's returns are incomplete or incorrect2.

Where both sales and related purchases are omitted from the accounting records, the quantum of the resulting assessment may comprise either:


    •     understated output tax, or


    •     understated output tax less unclaimed input tax

The legislation permits HMRC to allow input tax credit despite the absence of

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