VAEC2670 - Prime assessment procedures: Additional assessment followed by receipt of an unacceptable return

The procedural guidance in this manual only covers the VAT Mainframe and VISION processes. For guidance on the Making Tax Digital and ETMP processes for fully migrated customers, see VAEC0200 and the Making Tax Digital for VAT compliance toolkit.

Once you receive the mismatch return and decide not to accept the declared liability you should take one of the following actions. Where appropriate please see VRM8400 which discusses in detail when amounts paid by way of assessment are capped and cannot be refunded.

• If the prime assessment plus the additional assessment are to stand then send a letter to inform the trader that the previously assessed liability still applies
• If the prime assessment or additional assessment are to high but the prescribed accounting period in which the assessment was issued is more than 4 years prior to receipt of the late return then you must put a repayment inhibit on file and request Accounting and Adjustments to remove any excess capped credit from the trader’s account once your action has been completed. This is because repayment of any such assessed sums that were paid is not allowed under claims capping law. This ‘work around’ addresses a system weakness that will not permit capture of the amended liability for such ‘spent’ capped periods alongside assessed sums that were not appealed but may have been paid.
• If the prime assessment plus the additional assessment are too high then amend the trader’s mainframe account to an accepted amount using either form VAT643 or VAT644. Send a letter to inform the trader of the reduced liability
• If the prime assessment plus the additional assessment are too low then process a second additional assessment using a form VAT641.

In all cases the return should be scanned into the trader’s electronic folder.