AGL7400 - Errors and Assessments: Officer assessments - general
Officers can, subject to the policy on when and when not to assess which is explained in AGL7600, send assessments where a business has declared the wrong liability to aggregates levy or has made an error in respect of a claim to credit. Remember, there can be no officer’s assessment unless the business has made a return or the Department has sent a central assessment.
It is also important to remember that you should treat both over and under-declarations on an equal basis. The objective of our assessment policy is to achieve a proper result in terms of the right tax at the right time. If a business has made both over and under-declarations, the assessment should give the business credit for the errors in its favour. Officers should not, in such cases, assess only for under-declarations and tell businesses to deal with over-declarations by error correction action. However, over-declarations of levy should not be set-off against VAT or other debts.
You should explain an officer’s assessment to the business by an appropriate covering letter and any supporting schedule or schedules as needed. The covering letter should make clear the legal basis of the assessment. For example, if a business has failed to account for levy on aggregate commercially exploited by being mixed with anything other than water the assessment should explain why section 19(1)(d) of Finance Act 2001 applies, and that levy is due. The letter should also offer the business a review and explain that they have the right of appeal, and give the contact address of the Excise Review and Appeals team.
More information on the review and appeal procedures can be found in the Appeals, Review and Tribunal Guidance (ARTG) (HMRC website).
Audit (visit) reports
The report should provide a clear record to support any decision to assess. Should the assessed person seek a review, the reviewing officer will need access to the papers when looking at the case. For any decision appealed to a Tribunal, whether it be the original decision or the review decision, the assessing officer may be called upon to defend the decision at the Tribunal.
The audit trail for assessments should include details of:
- the basis of the assessment and calculations in a visit report;
- the office copy of the input document AL641;
- copies of the output document (AL 35 or AL38 assessment amendment) returned from Central Collection Unit (CCU); and
- copies of any letters and schedules issued to support the assessment.
You should raise all officer assessments using form AL641, in line with the information in this section. You must send all assessments to CCU for processing. For guidance on how to fill in form AL641, please see section AGL7700.
Any assessment made must satisfy the “best judgment” criteria. This means that given a set of conditions or circumstances, you must take any action needed and produce a result that is deemed to be reasonable. For more information on best judgement, please see section VAEC1400 of VAT Assessment and Error Correction Manual.
Role of manager
It is important that managers include an examination of the assessment audit trail as part of their risk based management checks. There should be systematic testing to ensure there is supporting documentation and a check on documents sent to CCU. You should also check the making and notification of the assessment to ensure accuracy and compliance with the law.
Assessments for VAT
As VAT is due on the AGL-inclusive value of commercially exploited aggregate, any change to the AGL liability may affect the VAT liability. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Please bear in mind the time limits for raising assessments in section AGL7500 (currently the same for both VAT and AGL).