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HMRC internal manual

VAT Assessments and Error Correction

Recovery Assessments: Time limits for Section 73(2) assessments

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 amended the assessment time limits as they relate to assessments made under section 73(2) of the VAT Act 1994 by the insertion of a new subsection (6A) into section 73. VAEC2940 explains when a section 73(2) assessment is appropriate.

The effect of the amendment is that where you discover that a late claim for input tax (as defined in VAEC8120) or a VAT credit (as defined in VAEC4050) has been paid or credited where it ought not to have been, you can assess to recover it within:

  • two years after the end of the prescribed accounting period in which the claim was wrongly paid or credited; or
  • one year after the evidence of facts sufficient to justify the making of the assessment came to our knowledge and four years from the end of the prescribed accounting period in which the mistaken payment or crediting was made.