What is a VAT assessment and can I appeal it?

A VAT assessment is HMRC putting a figure on what it believes you should have paid, because it disagrees with your return or you haven't submitted one.

It's an estimate based on the information HMRC has, which might come from your trading history, industry norms, or evidence gathered during a compliance check. It isn't automatically correct, and you're entitled to challenge it.

You have the right to ask HMRC to look again, request an independent internal review, or take the matter to the First-tier Tribunal if you believe the assessment is wrong.

Section 73 VATA 1994 gives HMRC power to assess VAT to the best of its judgement where returns are missing, incomplete, or where it isn't satisfied they're accurate.

Time limits for raising an assessment generally run for a set number of years from the relevant VAT period, extended where HMRC can show careless or deliberate behaviour caused the loss of tax.

Section 83 VATA 1994 lists assessments among decisions you can appeal, and section 49 allows a statutory review by an HMRC officer not previously involved, before matters reach the tribunal.

An assessment creates an immediate debt on your VAT account, even while you're disputing it. HMRC can pursue payment unless you've formally appealed and, in some cases, arranged to pay under protest or agreed hardship terms.

The burden is effectively on you to show the assessment is wrong, using your own records and calculations, since HMRC's estimate stands until displaced by better evidence.

Directors should treat an assessment as a trigger to review their VAT position thoroughly, not just the specific period assessed, since errors often repeat across several returns.

The immediate cost is the assessed VAT itself, plus interest calculated by reference to the Bank of England base rate from the date it fell due.

If HMRC concludes the underpayment was careless or deliberate, a separate penalty under Schedule 24 Finance Act 2007 can follow on top of the assessment.

Growth plan clients get free tax investigation insurance included, which can cover professional costs of challenging an assessment. See /fees to compare what each plan covers.

Don't miss the 30-day window to challenge an assessment; once it passes, the figure generally becomes final and payable.

Don't pay the assessment without querying it if you believe it's wrong. Paying doesn't automatically waive your right to appeal, but it's better to clarify your position first.

Don't submit an appeal without supporting calculations. A bare disagreement rarely succeeds; you need to show HMRC's figure is incorrect and why.