Value Added Tax Act 1994, section 77

Assessments: time limits and supplementary assessments

Part IV Administration, collection and enforcement

(1)F638Subject to the following provisions of this section, an assessment under section 73 ... or 76, shall not be made—

(a)F640more than [F6394 yearsF639] after the end of the prescribed accounting period or importation ... concerned, or

(b)in the case of an assessment under section 76 of an amount due by way of a penalty which is not among those referred to in subsection (3) of that section, [F6414 yearsF641] after the event giving rise to the penalty.

[F642 (2)Subject to subsection (5) below, an assessment under section 76 of an amount due by way of any [F643 penalty, interest or surchargeF643] [F643 penalty F644...F643] referred to in subsection (3) F645... of that section may be made at any time before the expiry of the period of 2 years beginning with the time when the amount of VAT due for the prescribed accounting period concerned has been finally determined.

(2A)Subject to subsection (5) below, an assessment under section 76 of a penalty under section 65 or 66 may be made at any time before the expiry of the period of 2 years beginning with the time when facts sufficient in the opinion of the Commissioners to indicate, as the case may be—

(a)that the statement in question contained a material inaccuracy, or

(b)that there had been a default within the meaning of section 66(1),

came to the Commissioners’ knowledge.F642]

(3)F648In relation to an assessment under section 76, any reference in subsection (1) or (2) above to the prescribed accounting period concerned is a reference to that period which, in the case of the [F646penalty, interest or surchargeF646][F646 penalty F647...F646] concerned, is the relevant period referred to in subsection (3) ... of that section.

[F649 (4) In any case falling within subsection (4A), an assessment of a person (“P”), or of an amount payable by P, may be made at any time not more than 20 years after the end of the prescribed accounting period or the importation F650 ... or event giving rise to the penalty, as appropriate (subject to subsection (5)).

(4A)Those cases are—

(a)a case involving a loss of VAT brought about deliberately by P (or by another person acting on P's behalf),

(b)a case in which P has participated in a transaction knowing that it was part of arrangements of any kind (whether or not legally enforceable) intended to bring about a loss of VAT,

(c)a case involving a loss of VAT attributable to a failure by P to comply with a notification obligation, and

(d)a case involving a loss of VAT attributable to a scheme in respect of which P has failed to comply with an obligation under paragraph 6 of Schedule 11A [F651 or an obligation under paragraph 17(2) or 18(2) of Schedule 17 to FA 2017F651] .

(4B)In subsection (4A) the references to a loss of tax brought about deliberately by P or another person include a loss that arises as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by that person.

(4C) In subsection (4A)(c) “notification obligation” means an obligation under—

(a)paragraph 5, 6, 7 or 14(2) or (3) of Schedule 1,

[F652 (aa)paragraph 5, 6 or 13(3) of Schedule 1A, [F653 orF653,F652]]

F654(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F655(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)paragraph 3, 4 or 7(2) or (3) of Schedule 3A, F656...

F656(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F649]

(5)Where, after a person’s death, the Commissioners propose to assess a sum as due by reason of some conduct (howsoever described) of the deceased, including a sum due by way of [F657penalty, interest or surchargeF657][F657 penalty F658...F657] —

(a)F660the assessment shall not be made more than [F6594 yearsF659] after the death; ...

F660(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)F661If, otherwise than in circumstances falling within section 73(6)(b) ..., it appears to the Commissioners that the amount which ought to have been assessed in an assessment under that section or under section 76 exceeds the amount which was so assessed, then—

(a)under the like provision as that assessment was made, and

(b)on or before the last day on which that assessment could have been made,

the Commissioners may make a supplementary assessment of the amount of the excess and shall notify the person concerned accordingly.

Definitions used in section 77 7

prescribed accounting periods

account for and pay VAT by reference to such periods (in this Act referred to as “prescribed accounting periods”) at such time and in such manner as may be determined by or under regulations and regulations may make different provision for different circumstances.

Defined in s.25(1) · see it in the full Act
prescribed accounting period

“prescribed accounting period” has the meaning given by section 25(1);

Defined in s.96(1) · see it in the full Act
VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act
the Commissioners

“the Commissioners” means the Commissioners of Customs and Excise;

Defined in s.96(1) · see it in the full Act
relevant period

(b) the “relevant period” in relation to a failure to comply with paragraph 44(2) of this Schedule is the period beginning on the date of the change or alteration concerned and ending on the date on which HMRC received notification of, or otherwise became fully aware of, that change or alteration.

Defined in Sch.9ZA para.78(4) · see it in the full Act

“relevant period”, in relation to relevant premises, means 10 years beginning with the day on which the relevant premises are completed.

Defined in Sch.10 para.35(2) · see it in the full Act
tax

“tax” means VAT;

Defined in s.96(1) · see it in the full Act
document

“document” means anything in which information of any description is recorded; and

Defined in s.96(1) · see it in the full Act

Cases considering section 77 23

DCM (Optical Holdings) Ltd v Commissioners for His Majesty’s Revenue and Customs (Scotland)

[2022] UKSC 26 · 12 October 2022Limits

At the material time, the provision imposed a three-year backstop for assessment, later increased to four years. It does not govern verification of a claim for VAT credit (see paras [16]; [23]; [42]).

Total Network SL (a company incorporated in Spain) (Original Respondents and Cross-appellants) v Her Majesty's Revenue and Customs (suing as Commissioners of Customs and Excise) (Original Appellants and Cross-respondents)

[2008] UKHL 19 · 12 March 2008Limits

The section prescribes statutory limitation periods for assessments. The minority treated differences from tort limitation as supporting exclusivity; the majority held that different procedures against different defendants did not preclude the claim against Total (see paras [15]; [31]; [138]).

Total Network SL v Customs & Excise

[2007] EWCA Civ 39 · 31 January 2007Limits

Applies the statutory time-limit provisions as safeguards forming part of the VAT recovery regime. (see para [24], [84]-[87]) Applies a three-year limit for assessments under section 73, subject to the other provisions of the section. (see para [24]) Applies the extended twenty-year assessment period where VAT has been lost through specified dishonest conduct or fraud. (see para [24])

3 more judgments, and what each says about section 77, are in the case-law panel in the full Act.

Amendments and notes

25 notes from legislation.gov.uk

Amendments

  1. F638Word in s. 77(1) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(2)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  2. F640Words in s. 77(1)(a) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(2)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  3. F639Words in s. 77(1)(a) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 34(2); S.I. 2009/403, art. 2(1) (with arts. 4, 9)
  4. F641Words in s. 77(1)(b) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 34(2); S.I. 2009/403, art. 2(1) (with arts. 4, 9)
  5. F642S. 77(2)(2A) substituted (27.7.1999 with effect as mentioned in s. 18(2)) for s. 77(2) by 1999 c. 16, s. 18(1)(2)
  6. F643Words in s. 77(2) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 21; S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  7. F644Words in s. 77(2) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(4)
  8. F645Words in s. 77(2) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(3) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  9. F648Words in s. 77(3) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(4) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  10. F646Words in s. 77(3) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 21; S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  11. F647Words in s. 77(3) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(4)
  12. F649S. 77(4)-(4C) substituted for s. 77(4) (1.4.2009) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 34(3); S.I. 2009/403, art. 2(1) (with arts. 4, 9)
  13. F650Word in s. 77(4) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(5) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  14. F651Words in s. 77(4A)(d) inserted (16.11.2017 for specified purposes, 1.1. 2018 in so far as not already in force) by Finance (No. 2) Act 2017 (c. 32), s. 66(4), Sch. 17 para. 51
  15. F652S. 77(4C)(aa) inserted (with effect in accordance with Sch. 28 para. 19 of the amending Act) by Finance Act 2012 (c. 14), Sch. 28 para. 10
  16. F653Word in s. 77(4C)(aa) inserted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(6)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  17. F654S. 77(4C)(b) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(6)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  18. F655S. 77(4C)(c) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(6)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  19. F656S. 77(4C)(e) and word omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(6)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  20. F657Words in s. 77(5) substituted (1.1.2023 for specified purposes, 6.4.2024 for specified purposes, 1.4.2026 for specified purposes) by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 21; S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2; S.I. 2026/370, reg. 3 text substituted for certain specified purposes only, see the commentary. Note: in some cases two versions of the measure may be present: the original version and substituted version.
  21. F658Words in s. 77(5) omitted (with effect in accordance with art. 1(3)(b) of the amending S.I.) by virtue of The Finance Act 2009, Sections 101 and 102 (Value Added Tax) (Late Payment Interest and Repayment Interest) (Exceptions and Consequential Amendments) Order 2022 (S.I. 2022/1298), arts. 1(3)(a), 3(4)
  22. F660S. 77(5)(b) and word omitted (1.4.2009) by virtue of Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 34(4)(b); S.I. 2009/403, art. 2(1) (with arts. 4, 9)
  23. F659Words in s. 77(5)(a) substituted (1.4.2009) by Finance Act 2008 (c. 9), s. 118(2), Sch. 39 para. 34(4)(a); S.I. 2009/403, art. 2(1) (with arts. 4, 9)
  24. F661Words in s. 77(6) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 69(7) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.

Modifications

  1. C60S. 77(4)-(4B) applied (1.5.2023) by The Value Added Tax (Margin Schemes and Removal or Export of Goods: VAT-related Payments) Order 2023 (S.I. 2023/68), arts. 1(1), 15(4) (with art. 1(2))