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HMRC internal manual

VAT Assessments and Error Correction

Circumstances that affect assessments: Deregistered traders

Assessments under Section 73(1) cannot be issued to cover periods after the date of deregistration because there cannot be a liability or a declaration and thus no error in any declaration.

The situation may arise however, where the date for deregistration is amended and this leaves an assessment or error correction notification covering a period after the date of deregistration.

In this situation you should establish whether

  • the assessment date is correct
  • the error correction notification is correct, or
  • the amended deregistration date is correct, then
  • amend the date of deregistration, or amend / withdraw the assessment as appropriate.

However, where a trader has ceased to make taxable supplies but has continued to claim input tax to which he is not entitled, an assessment should be made under Section 73(2), and a form VAT641 completed in the normal way, to recover the input tax incorrectly claimed.

The deregistration indicator causes the mainframe computer system to produce a print D1972 which assists in the management of processing officers’ assessments or error corrections.

 D1972 Print: Officer’s Assessment affected by deregistration - Procedure

Check the local office copy of the VAT 655/7 (Notice of assessment / Error Correction) to see if the Officer’s Assessment (OA) or error correction includes any periods after the date of deregistration.

If no such periods are included no further action is required. If, however, periods after the date of deregistration are included, you should check whether the deregistration date on the computer system is correct

  • if this date is incorrect, you should arrange for the deregistration section to amend the date
  • if the OA or error correction is incorrect you should amend or withdraw it using a form VAT643 or VAT644. In the case of an error correction you should refer to the trader to establish the correct period to which the correction relates and a fresh form VAT642 should then be processed if time limits allow.