VAT assessments withdrawn totalling over £130,000 – Victory

VAT assessments withdrawn

HMRC had undertaken an exercise at a business which suggested that sales were being suppressed by about 35%. A series of VAT assessments were raised by HMRC totalling over £130,000 which also indicated that VAT penalties would be raised at a later stage. The businesses firm of Accountants referred the matter to us for one of our VAT specialists to consider.

A great deal of information was gathered from the business in question, from the referring firm of Accountants and from HMRC. Once all of the information had been considered by one of our VAT specialists it transpired that the VAT assessments were invalid and hence the VAT assessments withdrawn by HMRC. This represented another great victory for one of our clients at Solve VAT.

It is important to consider all aspects of a VAT investigation to ensure that HMRC have treated a business fairly and that the VAT legislation has been properly applied when raising VAT assessments or VAT penalties. There are time limits that HMRC must comply with for a VAT assessment to be considered valid. VAT assessments withdrawn can also arise if an assessment is not raised using “best judgement”.

HMRC’s view of the law is that the making of the assessment for an amount of tax due and its notification to the taxpayer are separate and distinct operations. The VAT legislation prescribes time limits only for the making of an assessment. It does not prescribe any time limits for the notification of an assessment.

In the past HMRC defended VAT assessments where it could demonstrate that HMRC had made an assessment, i.e. finished quantifying the amount and had taken the decision to assess, before the time limit for the making of the assessment had expired, although it may have been notified at a later date. However, it is clearly undesirable that HMRC’s time limit rules should attach to a made date which is neither obvious or routinely disclosed to taxpayers.

Consequently, all VAT assessments must have been notified to the taxpayer within the time limit for making the assessment in order to demonstrate that it was indeed made in time. Failure to follow the correct procedures by HMRC can lead to VAT assessments withdrawn.

HMRC

If HMRC issue a series of VAT assessments late it may be possible to have the VAT assessments withdrawn or reduced. There are specific time limits for issuing a VAT assessment https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch51820

More about VAT assessments advice or call 0161 883 2120 to speak to one of our VAT experts.