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HMRC internal manual

Insurance Premium Tax

Assessments: errors

When not to assess

As a general rule all errors should be corrected by assessment action. But there are a number of situations where an assessment may not be appropriate.

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Small errors

You should not raise an assessment to correct an error where the value falls below current “small error” limits.

Generally, do not raise an assessment where the gross underdeclaration is less than £100. However, if any of these errors is a persistent misdeclaration or you feel that the issue needs exceptional reinforcement, you may assess the insurer regardless of this limit. Where you do not assess you should advise the insurer to make an appropriate adjustment on his next return and note your report accordingly.

You should discuss small (under £100) overdeclarations with the insurer and agree how such an error or series of errors might be corrected. Many insurers will be content to make an amendment on their next return, as this will reduce their administrative burdens. But always be prepared to raise an assessment where there is a net overdeclaration by an insurer, however small, if the insurer insists on that.

Our policy can be summarised as follows:



### Situation ### Action
Single isolated underdeclaration of £75: Do not make an assessment.
Single isolated underdeclaration of £175: Make an assessment.
Underdeclaration of £75 - error of a kind previously found and drawn to insurer’s attention, but not previously assessed: Make an assessment for £75.
Underdeclaration of £75 and overdeclaration of £50: net sum of £25 underdeclared: Do not make an assessment.
Underdeclaration £125 and overdeclaration of £50: net sum of £75 underdeclared: Make an assessment.
Underdeclaration of £50 and overdeclaration of £75: net sum of £25 overdeclared: Discuss with insurer - insurer to amend next return or make an (repayment) assessment for £25. Show gross over and under declarations separately - do not net off.
Net overdeclaration over £100: Make an assessment.




In all cases where an assessment is not ordinarily to be made, the error should be discussed with the insurer and agreement sought that the error will be corrected on the next return. If there is no agreement to amend the error on the next return an assessment should be issued.


BTOps (see IPT01200) will amend minor errors they discover i.e. if box 3 and box 4 does not equal box 5 and the difference is less than £10, the error will be ignored and the return will be processed. If the error exceeds £10 the return will be rejected and returned to the insurer for correction.