General assessment procedures: The computer system
VAT assessments are provided for in the VAT Act 1994 (VATA 94) as a means of establishing a debt which can then be pursued as a debt to the crown.
Although it requires HMRC to make and notify the amounts of an assessment, neither the Act nor the regulations made under it lay down any particular manner or time by which the notification is required to take place.
HMRC, in the exercise of their own powers of management under VAT, have devised various forms and procedures to make and notify assessments.
The mainframe computer system exists to allow the vast majority of tax assessments to be notified automatically to the trader and the trader’s computer records to be updated.
There are a number of input forms, applicable in different situations, which need to be completed when making and notifying an assessment, see VAEC8500.
On input of the relevant documents the mainframe computer will
- total the tax liabilities for each period, netting under-declarations and over declarations as necessary
- record the net liabilities as adjustments against each accounting period and calculate the true amount of tax
- create an interest calculation record, if appropriate and calculate the interest due on the whole assessment, and
- recalculate any surcharge where appropriate.
For guidance on the objectives and risks of the computer system see VAEC6060.