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HMRC internal manual

VAT Assessments and Error Correction

Recovery Assessments: Time limits for Section 80(4A)

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.

Section 120 of the Finance Act 2008 has made amendments to the time limits in relation to recovery assessments made under section 80(4A) of the VAT Act 1994.

The effect of the amendment is that where you discover that a claim under section 80 has been paid and ought not to have been, you can make an assessment to recover it within two years after the later of:

  • the end of the accounting period in which the mistaken payment was made; or
  • the date on which the evidence of fact sufficient to justify the making of the assessment came to your knowledge.

This means that you can make an assessment within the first two years after the end of the accounting period in which the claim was paid regardless of whether the facts on which the payment was based have changed.

Where a claim is paid and it turns out that the facts upon which the claim was paid were wrong, you have two years from the date on which those new facts came to the Commissioners’ knowledge to make an assessment to recover it. If you are making an assessment under this time limit, it does not matter how long ago the payment was made.

These changes took effect in relation to any assessment made on or after the 19t h of March 2008.

Please note that the changes made to section 80 in 2005 have had the effect that all claims for overdeclared output tax fall within its scope. As a result, any assessments made to recover amounts paid pursuant to a claim under section 80 are made under subsection (4A). This means that the judgment of the High Court in CCE -v- Laura Ashley Ltd [2003] EWHC 2832 (Ch); [2004] STC 635 is of historical interest only.