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HMRC internal manual

VAT Assessments and Error Correction

Error correction for VAT: Credibility queries: Treatment of errors recorded on next return

If you note that an error in the queried period has been noted by the trader in his later VAT records, for instance in readiness for error correction or for inclusion in the next return, you should proceed as follows.

Providing there is no fraud implications, the error should be

  • removed from the later VAT record and,
  • subject to verification, be included in your corrections to the queried period to which the error relates.

These adjustments will not be liable to misdeclaration penalty or interest and should be notified in accordance with VAEC8340.

You should be aware however that a Schedule 24 Finance Act 2007 penalty may apply if the original inaccuracy was made carelessly. See CH81100 for types of inaccuracy.

As the amendment to the VAT account is not considered to be a disclosure for Schedule 24 penalty purposes any penalty imposed would normally be on a prompted basis See CH82420 for details on unprompted and prompted behaviour.

If an error recorded in the later VAT records relates to a period that is not subject to a pre-repayment credibility query, the trader is permitted to follow the standard procedure of making an error correction or carrying forward to the end of the current period for inclusion in the VAT return as appropriate.

If, following completion of a pre-repayment credibility query and full processing of the return, the trader subsequently produces further acceptable evidence, you should input a form VAT641 onto the VALID computer system to notify the trader and correct the VAT ledger and any penalty imposed.