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HMRC internal manual

VAT Assessments and Error Correction

Circumstances that affect assessments: Redundant traders

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.

The mainframe computer system exists to allow the vast majority of tax assessments and error correction notifications to be notified automatically to the trader. It also allows the trader’s computer file to be updated.

Officer’s assessments and responses to error correction are computer produced; via the input of either a form VAT641 for assessments, or VAT642 for accurate error corrections, but this is only possible whilst the trader remains on the live VAT database.

Once a trader deregisters for VAT, all indicators have been cleared and there is a nil balance on file, the case will then proceed to redundancy and the computer record is closed. A trader removed from the database is then transferred to the Redundant Traders Listing (RTL).

Transfer to the RTL does not inhibit the subsequent submission of returns, the making of officer’s assessments, or the processing of error correction notifications but this has to be done manually.

For guidance on

  • Procedure for dealing with amounts due from redundant traders , see VAEC3562 
  • Procedure for dealing with amounts due to redundant traders, see VAEC3563.

As a matter of policy, deregistered traders who have become redundant on the VAT mainframe should not be assessed for mis-declaration penalties, see VCP10752.

However, Schedule 24 & 41 penalties should be assessed for such persons by following a manual process, see CH407900.