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HMRC internal manual

VAT Default Interest Manual

Reviews and appeals: Use of the VAT647 to lift the appeals indicator.

When an officer’s assessment is appealed against, you need to input a Form VAT673 to VALID to set the appeals indicator. This removes the original interest from the OA screen on VISION and suspends the calculation of any further interest. Form VAT647 lifts the appeals indicator.

Guidance on setting and lifting the appeals indicator including completion of the VAT673, VAT674 and VAT675 can be obtained by contacting the VAT System Liaison Team.

Action to take after the appeal is completed

The assessment is to be amended

  • the appeals indicator must be lifted using Form VAT 647 before the Form VAT 643 (OA amendment) is input, and where possible this must happen on the same day. If the VAT 643 is processed before the VAT 647 the resulting output document will not show any revision of the interest
  • as the interest recalculation takes place automatically the taxpayer must be notified manually
  • the VAT 675 cancels the appeal and triggers recalculation of the interest (the original interest plus any further interest that has built up since the last notification)
  • the VAT 647 lifts the appeals indicator
  • VAT 643 (OA Amendment) Once this is generated check the VAT 656 output against the D1686 (changes to interest print), copy to EF and send to the taxpayer.

The assessment is not to be amended

  • A VAT 675 is needed to cancel the appeal and trigger the interest recalculation and a VAT 647 must be used to lift the appeals indicator. However there is no automatic interest notification to the taxpayer so this must be done manually. The taxpayer’s account must be monitored for interest changes (the D1686 shows all changes to interest).

It is good practice to make sure the taxpayer is given an early warning of the possibility that an interest assessment may be issued following their appeal.

How to complete the VAT 647

To lift the indicator, insert “2” in the “set/lift indicator” box. You must always remember to lift the indicator because if it is not lifted before the assessment is dropped from the taxpayer’s file, the assessment reference will continue to appear on the D2015 monthly management print and after six months have passed it will be impossible to remove it.

VAT 647 processing

Once you have completed the form it should be forwarded to the VALID pre-input control seat for input via VALID. The information will be transferred to the mainframe computer and processed overnight to update the taxpayer’s file. However before the file is updated a number of checks are done and the input may reject.

If the computer rejects the VAT647, this will be reported to you on a D0502 print which will contain an error code and a report message.

Error Code 174, Report Message “Orig O/A not found”

This means the OA reference number does not match any of the OA records held on the taxpayer’s computer file. If this happens you should check that the OA reference is correct. If it is not it should be amended and resubmitted for input.

Error Code 177, Report Message “Appeals Indicator not set”

This means the appeals indicator has not previously been set and therefore cannot be lifted.

Error Code 178, Report Message “Input local office not this local office”

This means the inputting office does not correspond with the taxpayer’s local office held on the database. The VAT647 will only be accepted if the input office and taxpayer’s local office held on the database agree. Either the local office should be amended on the input document to agree with taxpayers local office on computer file and resubmitted for input, or the folder should be sent to the taxpayer’s local office for action.