Assurance procedures: The mechanics of raising assessments
If the trader is non-compliant and you decide that assessment action is appropriate the normal procedure is to schedule all the transactions for every period to be assessed and assess on that basis. If the assessment is due to lack of evidence, the trader would have to obtain satisfactory evidence for every transaction in order to adjust their VAT account and VAT return in the period that they obtain the evidence. This could be an extremely time consuming procedure for the trader.
An alternative method of raising an assessment for lack of evidence is to use representative sampling. This method, which is a suggestion only, has been used previously with the agreement of traders and their tax advisors. It can be used if you as the Assurance officer consider it to be appropriate. This method saves the Officer’s time in scheduling the assessment and reduces the trader’s costs in obtaining the evidence. However this method should not be used without prior discussion with the Export and Removal of Goods Unit of Expertise (UoE) - see VEXP10600 for contact details. The mechanics of this method is to:
- Agree several sample representative periods of trading during the period to be assessed with the trader and if necessary their tax advisors.
- The trader should then be asked to produce evidence for these periods.
- The officer can then calculate a percentage by value of transactions for which satisfactory evidence is not held.
- This percentage can be extrapolated to the periods which are to be assessed.
- The trader must obtain evidence for all the transactions in the sample.
- It would be acceptable for the trader to obtain the evidence to enable them to adjust their VAT return on the basis of this extrapolation. If for example the trader obtains evidence for 50% of the transactions in a period he can adjust for 50% of the assessment in the period in which the evidence is obtained.