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HMRC internal manual

VAT Assessments and Error Correction

Error Correction for VAT: Error returns: Not fully processed in Banking Operations

The Banking Operations (BOPS) Error Unit makes in house corrections where appropriate to error VAT returns. For many VAT return errors however BOPS send the return back to the trader for correction.

Those returns sent out for correction, because they contain errors, will not have been fully processed. If the trader’s reply shows that they do not understand the query or need assistance, BOPS invite the trader to contact the Error Unit Helpdesk if the query is for an error VAT return or the NAS if it does not.

BOPS send a covering letter (VAT106) with the VAT error return. The trader is advised what the error is on the VAT return, and asked to amend the return to enable it to be fully processed, ensuring that the figures are legible.

All amendments must be initialled and dated by the trader. Amendments are to be made by the original signatory or, if unavailable, some other qualified signatory.

If, after one week for repayment errors, or three weeks for payment errors, a reply is not received; a reminder (VOPS577) is issued to the trader advising we have sent back their return for correction and we require a corrected return.

Should the trader not comply with this request, a second reminder is issued to the trader on the same timescale. If we do not receive a response from the trader, BOPS Error Unit close their case, and further action to contact the trader and correct the error is pursued by local Debt Management Units.

If the trader fails to reply to BOPS’ request, for amendment and simply returns the return without making the requested amendment, if it is a payment return, it should be processed as usual and, if necessary, an assessment should be made in the normal manner under section 73(1) VATA, for the appropriate under-declaration.

If, however, the trader does not send back the return, a manual prime assessment should be made by completing a VAT 152A in accordance with VAEC2100 of this guidance.

If the trader corrects the return, and as a result of which more money is due or the trader pays more than the amount due, you should refer to HMRC guidance covering receipt, custody and disposal of money.

Unqualified acceptance of a remittance for less than that due to HMRC may entail a loss of the Department’s legal right to claim the full amount from the taxpayer.

If the return is a repayment return, the matter will be referred to the local office to contact the trader and obtain a corrected return.

A debt must be properly established, either by the acceptance of a correctly completed return or the issue of a tax assessment, after which recovery action can be considered.

For example, where a return is submitted it must either be processed, after which an assessment can be made, or where there is either an error or a credibility query, and the return remains unprocessed, you should seek to rectify the error or query using relevant HMRC guidance.