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HMRC internal manual

VAT Assessments and Error Correction

General assessment procedures: Time limit implications in making and notifying 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.

HMRC’s view of the law is that the making of the assessment for the amount of tax due and its notification to the taxpayer, by either a manual assessment notification or a computer produced form VAT655, are separate and distinct operations

This is based on the wording of Section 73(1) (2) and (9) VAT Act 1994.

The VAT legislation prescribes time limits only for the making of an assessment. It does not prescribe any time limits for the notification of an assessment.

In the past HMRC defended assessments where we could demonstrate that we had made an assessment, i.e. finished quantifying the amount and had taken the decision to assess, before the time limit for the making of the assessment had expired, although it may have been notified at a later date.

However, it is clearly undesirable that our time limit rules should attach to a made date which is neither, obvious or routinely disclosed to taxpayers.

Consequently, all assessments must have be notified to the taxpayer within the time limit for making the assessment in order to demonstrate that it was indeed made in time.

Any detrimental revenue affect of using the notification date for time limit purposes is relatively insignificant and more than compensated for by the removal of contentious litigation surrounding the made date.

In cases where there is a danger that an assessment may go out of time whilst awaiting the VAT641 to be processed, it will be necessary to notify the assessment by letter, see specimen letter VAT(LC)16: General VAT assessment letter (live trader) available on SEES.