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HMRC internal manual

Excise Assessments Interim Guidance

Protective assessments: when are they required

In general, you will need to make protective assessments when HMRC is contesting a court judgement which has a wider impact.

However, where HMRC contest a decision of the First-tier Tribunal, you will not normally be required to make protective assessments in relation to

  • other businesses, or
  • other accounting periods not subject to appeal in the lead case

In those circumstances normal assessments can be made, processed, issued and any duty due collected in the usual way.

In those cases where HMRC are awaiting the outcome of litigation you may discover potential under-declarations on returns, or you may have processed and paid a disputed claim. If at this stage you are currently in time to assess to recover the tax under the relevant time limits appropriate to the type of assessment involved, you should not delay.

Note: It is essential that you do not postpone the issue of a protective assessment. This is particularly important if there is any danger that the revenue will fall ‘out of time’ for assessments to be made.

Irrespective of the outcome a court judgement itself is not considered to be a fact for ‘evidence of fact’, time limit purposes.

The Court of Appeal judgement in the DFS VAT case handed down on the 16 March 2004 concluded that given its natural meaning, the word ‘facts’ regardless of context did not include the legal effect of either statute or a judicial decision.

In other words the date of the court judgement cannot be considered to be ‘evidence of fact’ for the purposes of the VAT Act 1994. It is therefore crucial that you do not wait for the court judgement before taking the decision to make protective assessments. See EAIG12100.