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HMRC internal manual

VAT Assessments and Error Correction

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HM Revenue & Customs
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Error correction for VAT returns: Interest and penalties: Return periods with a due date on or after 1 April 2009 careless errors

Where a person discovers a careless error in a previously submitted VAT return they must consider

  • how to correct the error, and
  • whether that correction is a disclosure for penalty purposes, see VAEC7660.

Careless is defined as failure to take reasonable care, see CH81120 for further guidance on reasonable care.

There are two methods a person can use to correct errors in previously submitted VAT returns, these are:

Separate notification

Where the net value of the errors is greater than the relevant limit errors must be corrected by making a separate notification in writing to HMRC, either by letter or form VAT652.

For full guidance on separate notifications and the relevant time limits, see VAEC7120 and VAEC7180 respectively.

This notification will be an unprompted or prompted disclosure depending upon the circumstances. See CH82420 for guidance on prompted and unprompted disclosures.

Return Adjustments

If the net value of the errors is below the relevant limit a person can adjust their VAT account and include the net value of the adjustment in the VAT return for the period of discovery, see VAEC7140 for further guidance on return adjustments.

This applies whether the errors are made

  • despite taking reasonable care, or
  • carelessly.

Correcting errors in this way is not a disclosure for the purposes of the penalty rules. A separate disclosure for penalty purposes should be made in writing either by letter or by using form VAT652. This will be an unprompted or prompted disclosure depending upon the circumstances, see CH82420.

Where a person’ submits a disclosure in respect of careless errors and has included, or intends to include, the net value of the errors in the return for the period of discovery, they should include a note to that effect.

Failure to do so may result in a VAT assessment and interest charge, see VAEC7610.

Should it transpire that, at the end of the accounting period of discovery, the net errors exceed the relevant limit, a separate error correction notification will be required, see VAEC7120.

For guidance on

  • non-careless error, that is errors made despite taking reasonable care, see VAEC7670
  • deliberate inaccuracies, see VAEC7700.

The legislation covering this is at

FA2007/Sch 24/ Para 3(1)(a)