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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT: Correction methods: Separate notification

A person can correct errors in previously submitted VAT returns, whatever their net value, see VAEC7150, by making a separate notification in writing to HMRC. This notification can be by letter or on the form VAT652.

The notification should provide full details of the errors, including

  • the VAT accounting period in which each error occurred
  • whether the error relates to input tax or output tax
  • how each error arose
  • the VAT under-declared or over-declared in each VAT period
  • how the VAT under-declared or over-declared was calculated
  • the total amount to be adjusted.

The error notification should be made to the VAT Error Correction Team (VATEC) or, if appropriate, to the person’s Customer Compliance Manager (CCM). See VAEC7130 for details of the VATEC office to which notifications should be sent.

Alternatively, if the net value of the errors does not exceed certain limits, the person can adjust their VAT account and include the value of the adjustment in the VAT return for the period of discovery. See VAEC7140 onwards for further guidance on return adjustments.

Return periods with a due date on or after 1 April 2009

Finance Act 2007 introduced a new penalty regime for careless or deliberate inaccuracies in returns or other documents. VAEC7660 provides further guidance on penalties and their relationship with the error correction regime.

When you examine an error correction notification you will need to take an objective view of the facts presented to determine how the error was made. You may need further information to determine whether the error was made

  • despite taking reasonable care
  • carelessly, or
  • deliberately.

You must remember that the majority of errors will have been made despite the person taking reasonable care and so no penalty will be due. People do make mistakes. HMRC does not expect perfection.

Note: The legislation for separate notification is covered in SI 1995/2518/Reg35.