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HMRC internal manual

VAT Assessments and Error Correction

Recovery assessments: Recovery of incorrectly combined claims made prior to 26th May 2005

This page explains the recovery provisions where there has been an incorrect refund/credit involving a combination of both Section 80 and Section 25 claims made prior to 26th May 2005.

Prior to 26th May 2005 claims for over-declared output tax on a repayment return were not considered to be Section 80 claims. This was because the law at that time required a trader to have actually paid us the amount he was reclaiming.

This meant that prior to 26th May 2005 a situation could arise where a single error correction included ‘over-declarations’ on both payment and repayment returns.

In these circumstances recovery assessment is required under both Section 80(4A), and Section 73.

The recovery assessments in respect of

  • those periods which resulted in a claim for an overpayment of tax (generally involving a payment return)are be made under Section 80(4A), and
  • the assessments for those periods which resulted in a claim for further credit (generally involving repayment returns) are made under Section73(2).

The law has since changed so that claims on or after 26th May 2005 for over-declared output tax involving both payment and repayment returns are treated as Section 80 claims.