Prime assessment procedures: Additional assessment followed by receipt of an acceptable return
Where a VAT period shows both a prime assessment and an additional assessment(s) and a VAT return is received for an amount that is less than the combined sum of these assessments, the return will mismatch. Please seeVR7510 which discusses in detail when amounts paid by way of assessment are capped and cannot be refunded.
If you decide the amount declared on the mismatched return reflects the correct liability, you should take one of the following actions.
- Check the date the additional assessment was issued. If the prescribed accounting period in which the assessment was issued is more than 4 years before receipt of the late return then repayment of the assessed sums is not allowed. To work around a system weakness that will not permit capture of the return liability for such ‘spent’ capped periods you must put a payment inhibit on file and request Accounting and Adjustments to remove any excess capped credit from the trader’s account once your action has been completed.
- If the accepted return liability is less than the prime assessment then use form VAT644 to allow the system to capture the late return declaration. Please note that this action is for accounting purposes only and you are not formally withdrawing the assessment so all output documents should be suppressed
- If the accepted return liability is greater than the prime assessment, use form VAT643 to allow the system to capture the late return declaration without rejecting or mismatching it, so that the prime assessment plus the additional assessment equal the liability on the return. Please note that this action is for accounting purposes only and your are not formally reducing the assessment so all output documents should be suppressed.
In both cases send a letter to inform the trader that you have accepted the return liability. If there are any capping issues you should also advise the trader that HMRC will not be able to give any credit for paid assessments that were raised more than 4 years ago.