VAEC2640 - Prime assessments procedures: High or nil liability discovered by HMRC

The procedural guidance in this manual only covers the VAT Mainframe and VISION processes. For guidance on the Making Tax Digital and ETMP processes for fully migrated customers, see VAEC0200 and the Making Tax Digital for VAT compliance toolkit.

Where you discover that the true liability is less than the assessed liability firstly make a note in your visit report of the apparent liability as shown in the traders books.

If it is evident that the amount due is clearly less than that accepted on the prime assessment and a refund is requested, you should, subject to any capping limits, advise the trader

• to submit the return for the period showing the full liability
• that on no account must the amount paid on the prime assessment be deducted from the liability declared on the return
• that the refund of any overpayment is subject to the 4 year cap in Section 80 (4) VATA 1994.

In any event this is not a situation in which over-declaration action should be taken. Such action is only appropriate when a trader declares an amount which is in excess of their true liability.

There is no legal provision to assess an amount which has been overpaid.