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HMRC internal manual

VAT Assessments and Error Correction

From
HM Revenue & Customs
Updated
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Protective assessments: Action where claims subject to ongoing litigation

There will be occasions where following an adverse judgement HMRC are required to repay VAT even though HMRC are contesting that judgement. In such circumstances we will issue recovery assessments in order to protect our position in the event that our appeal is successful. .

It is important that the correct assessing provisions are identified.

If we have been obliged to repay a claim to input tax then the assessing power is Section 73(2) which will entail preferred and alternative protective assessments. The assessment should be notified by letter. See specimen letter VAT(LC)32: Protective Assessment - S73(2) Voluntary disclosure processed, which is available on SEES.

If the claim was a Section 80 claim there will be a need to make assessments under Section 80(4A)). The assessment should be notified by letter. See specimen letter VAT(LC)33: Protective Assessment - S80 claim processed, which is available on SEES.

Recovery assessments under both section 73(2) VATA94 and section 80(4A) VATA94 may be made up to 2 years after the date repayment was made or credit given to the trader.