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HMRC internal manual

VAT Assessments and Error Correction

General assessment procedures: Importance of avoiding delay

You could find that earlier periods run out of time under the Section 77(1)(a) VAT Act 1994 four year time limit if there is a delay in obtaining the information you need in order to make an assessment.

This could happen where, for example, you are preparing to assess under-declarations discovered in a period nearly four years prior to a visit, or a business takes longer than expected to respond to your enquiries.

You should always bear this risk in mind when preparing for assurance visits and requesting further information from businesses as a result of visits. Officers and managers should ensure that assessments are made and notified for the earlier periods with minimum delay. But remember, it is essential that such assessments are made to best judgement, see VAEC1400.

If you are experiencing difficulty in obtaining the evidence upon which to base a best judgement assessment

it is even more essential that you promptly issue your pre-assessment letter, , setting out your proposed calculations based on the limited information available and giving the business a reasonable amount of time to make further representations. See specimen letter VAT(LC015: Pre-assessment letter, which is available on SEES.

When doing this, you should bear in mind when the four year time limit will run out for any period covered by the proposed assessment.

Any tax lost because of a failure to make and notify the assessment within the time limits must be formally written off as due to official error. The write off should be reported as required by accounting guidance.