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HMRC internal manual

VAT Assessments and Error Correction

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HM Revenue & Customs
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Powers of assessment: VAT assessment powers: Time limits for long first period return assessments

Time limits for assessments involving long first period returns

The main reason for issuing a long first period return is for the convenience of both the trader and HMRC.

It saves the trader the difficulty of retrospectively establishing net quarterly liabilities. It involves only one document rather than many. For us it means issuing and processing a single return for one prescribed accounting period.

In the majority of cases involving a long first period there will normally be a liability to a Section 67 belated notification penalty, see VCP10370, or a penalty under Schedule 41 FA08 for failure to notify, see CH70000.

When making an assessment in respect of a long first period the provisions of Section 73 and Section 77 VATA 94 will normally allow us to assess for the whole of the prescribed accounting period.

Where possible officers should raise their assessments in recognition of the appropriate time limits as follows;

  • Section 73(6)(a) VATA 94 if the end of the prescribed accounting period is within 2 years of the date of the assessment
  • Section 77(1)(a) VATA 94 if the end of the prescribed accounting period is more than 2 years but within 4 years of the date of the assessment
  • Section 77(4) VATA 94 if the end of the prescribed accounting period is more than 4 years after the date of the assessment. This will normally be appropriate liable no longer liable cases.

When making an assessment under Section 77(1)(a) or 77(4), remember that you are still required to make your assessment under the one year evidence of facts rule contained in Section 73(6)(b) VATA 94.