This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Small and Medium Enterprises Assurance Manual

The audit process: estimation for completion of VAT return: DMU and outstanding returns

Many traders subject to audit will have defaulted on their legal obligation to furnish returns and pay the tax due by the due date. The aim of DMU is to ensure that declared or assessed tax is paid as soon as possible. The aim of assurance should be to ensure that the declared or assessed tax is correct. The two aims are complementary and, whenever appropriate, you should remind traders of their legal obligations and of the consequences of default.

Efforts should be made during the audit to obtain completed returns and officers should arrange to take up any offered. When returns are uplifted it is most important that the return form is not marked in any way (other than indicating the date of receipt in the top right hand corner marked ‘official use’).

Any return that has been accepted under the above conditions must be forwarded to the VCU without delay. This is particularly important if the return is a claim for repayment, as delay might incur a repayment supplement. The trader should contact NAS to request blank returns.

When the trader has failed to submit a return, details of the period liability should be extracted from the VAT account or other records, or by questioning the trader. Be sure to extract enough information to enable a prime, or additional assessment, to be raised in accordance with VAEC - VAEC - VAT Assessment and Error Correction and error correction using actual figures or best judgment or to demonstrate that no tax is due.

Officers may find information that would be of use to the Debt Management Unit, concerning the financial position of traders that may not otherwise be revealed. Please refer to DMBM - Debt Management and Banking Manual for further guidance.

Assessment and collection of tax are activities which the Department keeps separate for reasons of revenue security. Officers should not normally accept payment of amounts, which they have themselves assessed, except where it is apparent that we will be unable to collect the debt at a later stage.