VCP10733 - Misdeclaration penalty: misdeclaration penalty for large errors in a single VAT accounting period: additional assessments - 30 day notification period

The law allows traders 30 days beginning from the date of a central assessment to tell HMRC if the assessment has understated their true liability and avoid a misdeclaration penalty (MP). This means that if you additionally assess the trader within the 30 day limit you should set the MP inhibit signal on the electronic Form VAT 641.

Note: This can also be hand written onto a manual version of Form VAT641.

It is reasonably straightforward to decide if traders have had 30 days to tell you of a central assessment that has understated their true liability. However you may have difficulty establishing precisely where the 30 day limit should end. If this happens you should always use your discretion and adopt a common-sense approach.

For example:

• if you find an understatement at a visit within the 30 days but do not make the assessment until after the 30 days, the trader has not had full time to draw the understatement to your attention and you should set the inhibit.
• towards the end of the 30 day limit you may have arranged an appointment for a visit which takes place after the 30 days. In this situation if the trader discovered an understatement but waited to inform you at the visit, you should normally set the inhibit signal unless you have reason to believe he would not otherwise have told you before the 30 days expired.

For further guidance on additional assessments, see VCP10734.