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HMRC internal manual

Excise Assessments Interim Guidance

Notifying assessments - forms, letters and schedules: some remedies for inaccurate notifications

Errors solely in notification do not make an assessment invalid. They can be rectified by correcting the notification.

It is recommended that when advising a trader of the correct notification or where you have made a fresh assessment you should also send separate letter of explanation to remove any doubts or confusion by the trader.

If however you feel this may be contentious, you are advised to contact Tax Administration, Litigation and Advice (TALA) Caseworker service for technical queries.

In the Court of Appeal in Bassimeh EWCA/Civ/1996/999 the Court held that:

‘A valid notice, in my judgment, must inform the taxpayer (section 13) or the director (section 14) that a valid assessment has in fact been made. If it fails to do so, it may be for one of two reasons. Either the notice itself is defective, because it does not record accurately what was done ; or the assessment itself was not carried out on the correct basis, although the notice itself is accurate.’

‘I would hold, therefore, that the notice is valid if it states what calculation, or assessment, has been carried out, and the assessment is valid if the calculation is whatever the statute requires, in the circumstances of the case.’

‘Moreover, there is some authority that even the VAT legislation may be interpreted from a common-sense point of view : per Balcombe L.J. in House v. C. & E.Commrs. , “is there any reason why we should not let common sense apply and say that the taxpayer was here given proper and adequate notification of the basis upon which he had been assessed?” (page 161j). I would also cite my own judgment in Georgiou v. C. & E. Commrs. [1996] S.T.C. 463 at 480/1. There should not be any requirement to carry out, or to notify, any calculations which would be simply otiose.’

The key point is that if challenged on the validity of the assessment on simple matters of mistakes, then HMRC may be able to prove by reference to pre assessment and assessment documents (including any internal HMRC reports detailing the basis of the assessment if necessary) that the assessment was made correctly.

Thereafter (after the assessment was made or the decision to assess was made) any error in the assessment notification can be corrected by issuing a corrected notification. This should make it clear that it is the erroneous notification that is being corrected and point out the assessment was correctly made in all other respects.

In addition in the case of BUPA Purchasing Ltd (a VAT case) the court of appeal held that an assessment can be maintained for a reason other than the reason originally notified.

This judgement was, however, limited in that it

  • does not allow you to increase the amount assessed, and
  • applies only where the assessed liability relates to the same transactions or series of transactions.

We would not attempt to uphold a change of basis where it would be unreasonable in the public law sense for us to do so or in circumstances where it would be obviously unfair on the taxpayer.

You should therefore as a matter of best practice withdraw the first assessment and issue a fresh assessment provided time limits allow you to do so.

Where however time limits under Section 73(4) Finance Act 1994 prevent you issuing a fresh assessment you are advised to consider if the BUPA Court of Appeal principles apply and whether the assessment should be maintained albeit for different reasons.

If however you are in doubt about this, you are advised to contact Tax Administration, Litigation and Advice (TALA) Caseworker service for technical queries.

Notification of assessment in Cases involving joint and several liability

The explanatory letter sent with the assessment should mention if you are notifying another person of a joint and several liability to pay the duty, see EAIG21000.