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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT: Correction methods: Return adjustment net errors

The net value of errors on previously submitted VAT returns is the difference between

  • the total amount of VAT due to HMRC, if any, and
  • the total amount due to the person, if any.

The net value of errors discovered in a prescribed accounting period can only be determined at the end of that period. At the end of the accounting period, if the net value of the adjustments is below the relevant limit it can be included in the VAT return for the period of discovery. For details of the monetary limit for discovery periods beginning before 1 July 2008, see VAEC7170 and for discovery periods beginning on or after 1 July 2008 see VAEC7180.

If, at the end of the prescribed accounting period, the difference between the two figures exceeds the limit a separate notification must be made. 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 previous VAT return was submitted. This type of inaccuracy can only be corrected by separate notification, irrespective of the net value of the errors. VAEC7700 provides further guidance about deliberate inaccuracies and penalties for an incorrect return.

Note: The legislation for return adjustment net errors is covered in SI 1995/2518/Reg34.