VAEC9580 - Demand for VAT: Assessment is not appropriate: Issue of an invoice for non supplies

Where a tax invoice is issued for non-supplies, for instance where there has been a transfer of a going concern, and tax is charged but not accounted for, you cannot issue the supplier with a VAT 655 assessment for the tax charged in error.

There is no liability to account for tax on non-supplies. You should take corrective action against either:

• the recipient of the non-supplies by disallowing any claim to input tax deduction. An assessment should be made on form VAT655. Interest should not be inhibited, but there may be a need to inhibit MP or,
• the supplier under VATA94 Schedule 11 paragraph 5, see VAEC9600.

The action you take should depend on which course is likely to be the most economical and successful.