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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT: Correction methods: Accounting adjustments

Provided they are accurate and made at the right time, adjustments that a person is required to make as part of the normal operation of VAT accounting are not errors. These accounting adjustments include

  • issuing or receiving credit and debit notes
  • an approve estimation procedure
  • retail scheme annual adjustments, or other adjustments required when a trader stops using a particular retail scheme
  • partial exemption standard method or annual adjustment
  • pre-registration and post deregistration expenses
  • adjustments under the Capital Goods Scheme
  • partial exemption claw-back and payback adjustment
  • intra European Community supplies of goods and exports, and
  • claims for bad debt relief.

If the original accounting adjustment was incorrect, or made at the wrong time, the person should correct the error by separate notification, see VAEC7120, or return adjustment, see VAEC7140.

The legislation that covers this is at

  • SI 1995/2518/Reg15, Reg24, and Reg38
  • SI 1995/2518/Reg28 and Reg29
  • SI 1995/2518/Reg66 to 75
  • SI 1995/2518/Reg99 to 110
  • SI 1995/2518/Reg111 and Reg29
  • SI 1995/2518/Reg112 to 116
  • SI 1995/2518/Reg 83 and Reg117 to 145
  • SI 1995/2518/Reg 165 to 172B.