VAEC4120 - Recovery assessments: Recovery of incorrectly combined claims made prior to 26th May 2005

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.

This page explains the recovery provisions where there has been an incorrect refund/credit involving a combination of both Section 80 and Section 25 claims made prior to 26th May 2005.

Prior to 26th May 2005 claims for over-declared output tax on a repayment return were not considered to be Section 80 claims. This was because the law at that time required a trader to have actually paid us the amount he was reclaiming.

This meant that prior to 26th May 2005 a situation could arise where a single error correction included ‘over-declarations’ on both payment and repayment returns.

In these circumstances recovery assessment is required under both Section 80(4A), and Section 73.

The recovery assessments in respect of

• those periods which resulted in a claim for an overpayment of tax (generally involving a payment return)are be made under Section 80(4A), and
• the assessments for those periods which resulted in a claim for further credit (generally involving repayment returns) are made under Section73(2).

The law has since changed so that claims on or after 26th May 2005 for over-declared output tax involving both payment and repayment returns are treated as Section 80 claims.