Post detection audit and assessment: 'bulk' or 'global' assessments
In situations where you are unable to allocate under-declarations of duty to specific accounting periods or dates, or you have difficulty in doing so, you may make a ‘bulk’ assessment. That is an assessment that covers more than one accounting period or a range of dates. The need to make a ‘bulk’ assessment is most likely to arise where the events giving rise to the liability are transaction based and it is not possible to determine exactly when the liability to pay excise duty arose.
Care is needed when considering making and notifying bulk / global assessments. In practice such assessment should only be considered where it is not possible to determine either the specific accounting period or duty point at which the liability to duty arose. In all cases where the period or duty point can be determined or at least narrowed down to a range of dates, then a separate line on the EX601 should be allocated.
Where it is difficult to determine the exact date upon which the duty point or tax point arose then it is reasonable to use a date range, which will cover the period in which the liability will have arisen. For example rebated fuel may have been purchased on a specific date and at a later date it is determined that the rebated rate should not have been applied due to a breach of conditions.
It is important therefore that you take care when making and notifying a bulk assessment. You must insert the start and end dates of the bulk assessment period on the assessment form (EX601) as the absence of these dates may render the assessment invalid. However you must ensure that no part of the bulk assessment falls outside the four-year assessment time limit, as this will make the whole assessment invalid.
Having made a bulk assessment, it is best practice when notifying it, to include a schedule. The schedule should provide details of each transaction or event, which gave rise to a liability for duty and for each duty point a line on the schedule should be included which shows the amount of duty in respect of that duty point.
A letter should accompany the EX601 and schedule, which explains the reason for the bulk assessment and should refer to the applicable primary and secondary legislation, including the legal provision under which you have made the assessment. It should also explain the provisions that prescribe for the duty point, the person’s liability to pay and the time for payment. Finally, it should explain the method used in calculating the duty due and that the total amount of the assessment is the sum of the individual amounts detailed in the accompanying schedule.
Therefore wherever possible it is good practice to issue a number of individual assessments, each being a line on the EX601, with each assessment/line explained on the accompanying letter of notification and schedule. In particular, the schedule should show the duty point, method of calculation and the amount of duty due in respect of that duty point and transaction. Thus if any part of the assessment is subject to a successful legal challenge, or an error is discovered in respect of a particular aspect of the assessment, then it is only the line or lines on the EX601 that are affected that must be withdrawn and not the whole assessed amount.
It is recognised that this could be very difficult to do when assessing for rebated heavy oil been taken into a road vehicle as fuel or used as fuel by a road vehicle. Nevertheless, wherever possible it is good practice to show an assessed amount in respect of each vehicle where trader records allow or for each purchase where such invoices exist.
Charging provisions in sub-section 12(2) HODA
It should be noted that there are two contraventions in sub-section 12(2) HODA which give rise to reciprocal assessing provisions in section 13(1A) HODA. These are for taking rebated heavy oil into a vehicle for fuel and using rebated heavy oil for fuel. While logic dictates that in order for the oil to be used as fuel, it has to be taken into the vehicle in the first place, care needs to be taken when assessing as a consequence of a positive test for red diesel, so as not to assess for the rebate twice; once under each provision. In some cases the person liable for each offence may not be the same. Due to incorrect presentation an assessment may be invalidated which if it were a global assessment, would result in the whole assessment having to be withdrawn. In view of this officers should consider showing amounts assessed in respect of oil used as fuel and amounts assessed in respect of oil taken into a vehicle, as separate lines on the EX601 for each offence.
Time limit legal provisions
One year evidence of facts rule
The one year evidence of facts clock starts under the one-year rule, as soon as there is sufficient evidence which came to the attention of the Commissioners, which justified the making of an assessment.
It should be noted that the clock starts when sufficient evidence is held that is relied upon in making an assessment and therefore further investigations, to determine quantum for example, would not qualify as evidence in this context.
Ask yourself the question ‘Can I issue an assessment with the evidence I have?’. If the answer is yes then the clock has started. It does not necessarily have to be a full, correct or final assessment.
( For further information on Time Limits please see the guidance given in EAIG9000 - Assessment time limits ).
Three year time limit for sub-section 13 (1A) HODA Assessments
For cases involving the misuse of ‘smuggled’ fuel the legal vires is provided by Section 13 HODA.
Shown below is the legislative background by which we arrive at the four year time limit for sub-section 13 (1A) HODA Assessments, the key date is defined by the Finance Act sub-section 12B(2)(f).
HODA sub-section 13(1A) - is the power to assess and notify for an amount equal to rebate when rebated heavy oil is taken into a road vehicle as fuel or used as fuel for a road vehicle.
FA sub-section 12A(3)(c) - enables the recovery of the amount assessed and notified under HODA sub-section 13 (1A) and introduces
FA sub-section 12A(4) - which are the time limits for making and notifying an assessment, whist for the application of these time limits
FA sub-section 12B(2)(f) - provides the definition of ‘relevant time’ for purposes of S12A(4).
Four year limit for Finance Act 1994 Section 12 Assessments
The legal vires for cases involving misuse of UK rebated fuel is provided by Section 12 (4) (a) of the Finance Act 1994 instead.
The 20 Year rule
This time limit extends the four-year rule to twenty where a person’s conduct involves dishonesty or fraud.