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HMRC internal manual

VAT Assessments and Error Correction

From
HM Revenue & Customs
Updated
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Recovery Assessments: Period to assess under Section 73(2)

There are still three different views on which prescribed accounting period must be assessed when making an assessment under section 73(2).

The first is that any assessment should be made for the accounting period to which the input tax was said to relate.

In its judgment in CCE -v- Croydon Hotel & Leisure Co Ltd [1996] STC 1105, the Court of Appeal held that assessments under section 73(2) must be made for the accounting period in which the claim for input tax was made.

However, in its judgment in CCE -v- DFS Furniture Company Ltd [2004] EWCA Civ 243; [2004] STC 559, the Court of Appeal also opined that such assessments should be made for the accounting period in which the claim for input tax was paid.

In view of this uncertainty, where you are issuing assessments under section 73(2) and the accounting period in which the claim was made and that in which the claim was paid are different, you should issue two assessments for the same amount.

The preferred assessment should be the one for the accounting period in which the claim related. The assessments for the accounting periods in which the claim was made and paid should be treated as alternative assessments and should not be enforced.