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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT returns: Processing: Voluntary payments

Out of time arrears may be brought to HMRC’s attention by means of an error correction notification. It is the person’s right to make a voluntary payment and any remittance received in such circumstances should be accepted.

However, in such cases you should always confirm that it is the person’s intention to pay the out of time arrears voluntarily and that they are aware of HMRC’s inability to assess.

You cannot normally process under-declarations for periods more than four years old in accordance with normal error correction procedures, however, see VAEC7700 concerning deliberate inaccuracies.

You should therefore invite the person to include the amount in the next return. If any payments relating to the arrears have already been received, you should send the remittance to the Cumbernauld Accounting Team and process the amount under the normal voluntary payment procedures.

As you have not processed an error correction you cannot refer to payments received on these grounds as tax on an assessment and should not make any reference to an assessment of tax for the out of time period(s) in any communication with the person.

However, if some of the periods notified are within the four year time limit for assessing, you can process those periods via a VAT642. When doing this, ensure that the correct portion of the remittance is processed as an error correction.

The output document, VAT657, should only relate to the periods that have been assessed and you should inform the person that the remaining amounts have been accepted as a voluntary payment.

Remember that this only applies to under-declarations. Over-declarations of output tax, or late input tax claims, are capped in accordance with the normal provisions.