VAEC4070 | Recovery Assessments: Period to assess under Section 73(2)

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.

There are still three different views on which prescribed accounting period must be assessed when making an assessment under section 73(2).

The first is that any assessment should be made for the accounting period to which the input tax was said to relate.

In its judgment in CCE -v- Croydon Hotel & Leisure Co Ltd [1996] STC 1105, the Court of Appeal held that assessments under section 73(2) must be made for the accounting period in which the claim for input tax was made.

However, in its judgment in CCE -v- DFS Furniture Company Ltd [2004] EWCA Civ 243; [2004] STC 559, the Court of Appeal also opined that such assessments should be made for the accounting period in which the claim for input tax was paid.

In view of this uncertainty, where you are issuing assessments under section 73(2) and the accounting period in which the claim was made and that in which the claim was paid are different, you should issue two assessments for the same amount.

The preferred assessment should be the one for the accounting period in which the claim related. The assessments for the accounting periods in which the claim was made and paid should be treated as alternative assessments and should not be enforced.