VAEC8880 - How to assess and correct: Error correction procedures: VAT657 Assessment details by period
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.
This part of the VAT657 gives details of the tax assessment for each period covered by the error correction. Interest is not period specific and is therefore only shown on the assessment summary. The computer will print the details of the prescribed accounting period to which the correction relates.
The VAT657 provides the error correction type and the reason code for each line detail completed on the VAT642. The notes which accompany the assessment explain the reason codes to the trader.
If two or more detail lines are completed on the VAT642 for the same period, this will be reflected on the VAT657 and separate boxes will appear on the VAT657 for each line on the VAT642.
For each period, the total of all tax assessments, but not interest, appears in the box headed Total amount due to or, due from HMRC for this period.
Care should be taken when issuing error corrections containing
Period reference 00/00
The period start and end dates must be inserted manually by the local office. Failure to complete these dates renders the error correction invalid. Several cases have come to light where these dates have been omitted.
If it comes to your attention that this has occurred, a valid assessment must be issued. This can be achieved by the input of a
- VAT644 to withdraw the error correction, but the trader must not be advised of this action, and
- VAT642 to produce a new VAT657 on which the start and end dates are manually inserted.
The new VAT642 should show the same remittance details as the original VAT642. If the correction was paid subsequent to the issue of the VAT657, the remittance will have to be appropriated to the correction following the VAT Civil Penalties guidance.
A covering letter should accompany the new documents to inform the trader that the original error correction was invalid.
You should be aware of any temporary credit that may occur as a result of this action. A repayment inhibit should be set to stop any temporary credit being repaid to the trader.
Dropped periods
The outputs for error correction on dropped periods only show a period reference. As our legal advisors have advised that period dates should also be included on the VAT657, officers should insert this information manually.
Periods after the date of insolvency
The VAT657 should be checked to establish if any periods have been assessed for interest after the insolvency date. If such a situation arises you should contact Debt Management and Banking, National Insolvency Unit.