A. Most errors identified on VAT visits are assessed under VAT Act 1994 Section 73 and are subject to time limits that are set out in Sections 73 and 77. Unless an Officer can prove dishonest declarations they cannot assess for VAT errors more than four years after the end of the prescribed accounting period.
Assuming your client’s VAT accounting periods end January/April/July/October, to be in time under the four year rule the assessment must have been made by 31st October 2016. So, in this case you are correct and the error is out of time.
If an error is discovered within the statutory time limits then in order to go back four years HMRC must assess within one year of obtaining evidence of fact sufficient to justify the making of an assessment. If an assessment is not made within one year HMRC are only entitled to go back two years.
In the above example, if the Officer obtains all of the information in order to make the assessment during the visit, then the assessment must be made by 31st January 2018 in order to go back four years from the date of the assessment. If the assessment is not made within one year then the officer can only assess for errors within the two years immediately leading up to the date he issues the assessment.
It is important to note that these time limits apply to VAT assessments for inaccurate declarations. The four year cap does not apply to late registration and in such cases HMRC is entitled to go back 20 years.
Croner Taxwise advises that if one of your clients receives an assessment for VAT, not only should you check that the grounds for the assessment are correct (assessments can be issued in error) but also that the assessment is for the correct period and within the statutory time limits.
Croner Taxwise has a team of experts who can help you ensure that an assessment is justified and for the correct time period. We also have a wealth of experience in resolving disputes with HMRC. Please contact one of our VAT consultants on 0844 892 2470 or for more complex queries, remember that our service extends to a written consultancy service at £180 per hour plus VAT.
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