Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Assessments
  • When will HMRC issue an assessment?
  • Power to assess
  • Time limits
  • Four-year and 20-year rules
  • Deceased person
  • Long first period return assessments
  • Raising other assessments
  • Assessments for penalties, interest and surcharges
  • Time limits
  • More...

This guidance note provides an overview of the types of situations where HMRC may issue an assessment to a VAT registered business. This note predominately deals with assessments issued on or after 1 April 2010. It should be read in conjunction with the following guidance notes:

  1. Default surcharge

  2. Correcting errors

  3. Crown debts and demands for VAT

  4. Paying VAT

This guidance note can also be used in conjunction with the Checklists - VAT assessments document.

When will HMRC issue an assessment?

VAT registered businesses have a legal obligation to submit their VAT returns and payments within specified time limits (due date). If the returns are not submitted or not received within the time limits or the returns submitted contain errors, HMRC has the power to raise an assessment, to the best of its judgement, to the business in order to collect the VAT due. Please see the Best judgement guidance note for more information.

The principal aim of assessments is to enable HMRC to establish a legally enforceable debt which can then be pursued as a debt due to the Crown.

An assessment can be issued in the following circumstances:

  1. where a VAT return is missing, incorrect or incomplete

  2. where a business has failed to render a return

  3. where an earlier prime assessment is considered to have been too low

  4. from 1 January 2015 where returns have not been made to the tax authorities in other EU member states in relation to supplies of broadcasting, telecommunication and electronic services to consumers in the UK. Please see the Hiring goods, e-services, telecommunication services and radio and broadcasting services and Mini One Stop Shop (MOSS) ― registration guidance notes for more information

  5. where the business has not kept required documentation and HMRC has not been afforded the facilities required in order to check the accuracy of returns

  6. where HMRC considers that the returns submitted are incomplete or inaccurate

  7. where the business has claimed incorrect tax credits, ie where for any VAT

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