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HMRC internal manual

Excise Assessments Interim Guidance

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HM Revenue & Customs
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Assessments to excise duty: the default powers

Section 12(1) of the Finance Act 1994 provides the power to assess for excise duty due where there has been a default.

Provided that an amount of excise duty has become due from a person, and there has been a default, you may assess the amount of duty to the best of your judgement, see EAIG13000, and notify it to that person or his representative.

The defaults

The circumstances when you may assess the amount of duty due under section 12(1) are described in section 12(2) of the Finance Act 1994. An assessment may be made and notified when:

  • a person has failed to make the returns required
  • it appears such returns are incomplete or inaccurate
  • a person has failed to keep, preserve or produce any accounts, books, records or other documents
  • it appears that such accounts, books, records or other documents are incomplete or inaccurate
  • there are specified failures under Schedule 1 or Schedule 3 of the Betting and Gaming Duties Act 1981 or Schedule 1 of the Finance Act 1997, or
  • there is unreasonable delay in the performance of any obligation, the failure to perform which would be a default under any of the above.

Extended definition of default

Section 12(2A) of the Finance Act 1994, introduced on 28 September 2001, extends the definition of default in section 12(2).

Before this provision was introduced, the defaults in section 12(2)(a) and (b) related only to documentary requirements imposed under UK legislation.

For practical purposes, the extended definition means that where an EC Council or Commission Regulation requires a person to make, keep or preserve a document, failure to do so is a default. Likewise, any omission or inaccuracy in such a document is a default.

Consequently, in a case where there is such a default and excise duty has become due from a person, you may assess the amount of duty to the best of your judgement, see EAIG13000, and notify it to that person or his representative under the section 12(1) power.