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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT returns: Interest and penalties, Default interest

From 1 September 2008 all assessments to recover VAT, resulting from the separate notification of errors in previously submitted VAT returns, will attract default interest when the interest represents commercial restitution, see VDIM3010 issued on 1 August 2008.

Net errors that are adjusted in the VAT return for the period of discovery, see VAEC7140, are not assessed and liability to default interest does not arise.

For details of the monetary limits for errors discovered in prescribed accounting periods beginning before 1 July 2008, see VAEC7170 and for periods beginning on or after 1 July 2008 see VAEC7180.

If you receive a separate notification of an under-declaration of VAT

  • That is below £10,000, and
  • The due date for the return for the period in which the error was discovered has not yet passed,

You should contact the person to confirm that they do not want to wait until the end of the return period and include the adjustment in their return, see VAEC7820.

The legislation that covers this is in VATA94/S74