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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT: Correction methods: Return adjustment

If the net value of errors discovered in a previously submitted VAT return does not exceed certain limits, a person can correct them by

  • adjusting their VAT account and
  • including the net value of the adjustment in the VAT return for the period of discovery.

For details of the monetary limit for correcting errors discovered in the VAT account for periods beginning before 1 July 2008 see VAEC7170 and VAEC7180 for periods beginning on or after 1 July 2008. VAEC7190 provides some practical examples.

Alternatively they can make separate notifications of the net errors. See VAEC7120 for guidance on making separate notifications.

Deliberate inaccuracies cannot be adjusted in a later VAT return. This is because the inaccuracy has not been discovered. The person knew about it when the earlier VAT return was submitted. This type of inaccuracy can only be corrected by a separate notification, see VAEC7120, irrespective of the net value of the errors. For further guidance on deliberate inaccuracies see VAEC7700.

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. However, provided it is below the relevant time limit a careless error can be adjusted in the VAT return for the period of discovery.

Correcting careless errors in the VAT return for the period of discovery is not a disclosure for the purpose of the penalty rules and a separate disclosure should also be made. See VAEC7680 and VAEC7690 for further guidance.

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. See VAEC7650 for guidance on penalties and their interaction with the error correction regime.

Note: The legislation for return adjustment is covered in SI 1995/2518/Reg34(1) and (3).