VAT RETURNS - 30.11.2023

Change to VAT processing policy

Deadline date. All returns must be submitted to HMRC within one month and seven days of the end of a period, e.g. the deadline date for your November 2023 return is 7 January 2024. If you miss that deadline, HMRC will issue a notice of assessment to estimate how much tax you owe. The assessment is based on your output and input tax declarations for previous periods, but could overstate the true position significantly.

Trap. The assessment is a legally enforceable debt as soon as it is issued, so you could be contacted by HMRC’s debt recovery section if you don’t pay it straight away. Avoid issues by ensuring on-time filing.

Withdrawal. HMRC’s policy has always been to cancel the central assessment as soon as your online return is submitted because this is the correct liability for that period. But the cancellation process may now be delayed following a change in HMRC’s policy.

New policy. HMRC has confirmed that a central assessment will not be withdrawn until your late return has been fully verified. In other words, if it decides to carry out compliance checks before processing, say, a repayment return, the officer won’t cancel the assessment until those checks have been completed.

Tip. There is an incentive for you to deal with any queries raised by HMRC as soon as possible so that the return can be processed and the assessment cancelled.

Pay. If HMRC delays processing your return, it might be sensible to pay the central assessment anyway to prevent its debt management team from chasing the payment. It is legally due until the return is processed. The overpayment will be repaid once the return has been processed.

Tip. Any penalties for a period will always be based on the actual liability for that period and not the central assessment. HMRC’s computer will automatically adjust the figures once the return has been processed.