asked the Chancellor of the Exchequer in how many cases during the financial year 1977–78 Her Majesty's Customs and Excise have produced provisional VAT assessments for small businesses; in how many cases provisional assessments have proved to be excessive; and what is the statutory authority for provisional assessments.

Under Section 31 of the Finance Act 1972, the Commissioners of Customs and Excise are authorised to issue VAT assessments where a person has failed to make a return, or where a return appears to the Commissioners to be incomplete or incorrect. It is only when someone has failed to make a return that the Commissioners issue provisional assessments, which are withdrawn if a satisfactory return and appropriate payment are subsequently made. About 800,000 such assessments were issued in the financial year 1977–78, but records are not maintained distinguishing these according to business turnover or comparing the assessment with returns subsequently rendered. The great majority of provisional assessments are replaced by subsequent returns.