A taxpayer may submit a VAT Return which includes estimated figures.
Regulation 28 provides for estimation of output tax, and Regulation 29(3) provides for estimation of input tax. The actual wording is almost identical (this is the output tax wording):
Where the Commissioners are satisfied that a person is not able to account for the exact amount of output tax chargeable in any period, he may estimate a part of his output tax for that period, provided that any such estimated amount shall be adjusted and exactly accounted for as VAT chargeable in the next prescribed accounting period or, if the exact amount is still not known and the Commissioners are satisfied that it could not with due diligence be ascertained, in the next but one prescribed accounting period.
You should enclose a note explaining why the taxpayer wishes to estimate his output tax and/or his input tax. For example: change of accounting software, change of staff, delay in obtaining third-party data.
- The correction of the output tax or input tax will normally be required on the following Return. The standard letter from HMRC approving estimation is usually quite explicit on this point.
- HMRC may allow adjustment on a later period; “…and the Commissioners are satisfied that it could not with due diligence be ascertained, in the next but one prescribed accounting period.” In other words, the taxpayer has to give a more robust explanation why the adjustment could not be made on the next Return.
Any request for estimation must be made in writing. I usually fire an email via the HMRC website.
HMRC expect that requests for estimation be made by the due date of the Return. Guidance states that requests “will often have to be handled immediately if the business is to make the Return by the due date.” In reality that does not always happen. In the absence of HMRC permission, given the choice between submitting an estimated Return, and submitting a late Return, with a risk of a Default Surcharge, I would choose the former.
HMRC guidance is here: https://www.gov.uk/hmrc-internal-manuals/vat-accounting/vatac2000
About Les Howard
Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire
I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.