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HMRC internal manual

VAT Assessments and Error Correction

HM Revenue & Customs
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How to assess and correct: Assessment procedures: VAT641 best practice

The following best practice points should be noted when completing a form VAT641:

  • You must not net off over-declarations and under-declarations in the same period as this would distort the penalty base (Gross Amount of Tax (GAT) for misdeclaration penalty purposes and Potential Lost Revenue (PLR) for Schedule 24 FA 07 inaccuracy penalties). Rather they should be listed as separate items on separate lines. The computer will accumulate individual line totals to give an overall total for the period.
  • It is unwise to group ‘constituent parts’ of an under-declaration together on one line for a single period. If the trader later appeals, you may wish to exclude or mitigate a single element as not being liable to misdeclaration penalty (MP). If you had grouped the parts together you would have to make the whole line not liable to MP. For periods subject to inaccuracy penalties under Schedule 24 FA 07 and for grouping under-declarations, seeCH82180.
  • You should enter whole pounds in the ‘due to’ and ‘due from’ columns. Under-declarations should be rounded down and over-declarations rounded up, however in the case of a nil net tax situation you should round the under and over declaration the same way (either up or down), to the same amount.
  • You should not enter due to and due from amounts on the same line. .