How to assess and correct: Error correction procedures: VAT642 post processing action
Notification of Accepted Officer’s Assessment
On receipt of the D1688, Notification of Accepted Officer’s Assessment, compare it with the error correction register and close the case.
Any case outstanding after 2 weeks should be investigated. Managers may find the D1688 to be a useful management check of the system.
Banking Operations check daily the error corrections keyed by local offices, and reconcile the payments received against the remittance keyed by the local office.
Where they find that the remittance appears on the trader’s ledger twice, thereby creating a false credit, they will contact the local office who keyed the VAT642.
- If the error correction is in a “pending” state, Banking Operations will request that the local office abort the error correction and re-key it with zeros in the “remittance received” and “DOR” boxes.
- If the error correction has been accepted, Banking Operations will send a written request stating that there is an erroneous credit on file and requesting that one of the credits be transferred out of the trader’s account. It may also be advisable to set a repayment inhibit to stop the erroneous credit being released back to the trader. You must ensure that the repayment inhibit is lifted after the trader’s account has been corrected.
- In cases where the error correction has been accepted, the VAT642 must not be withdrawn using the VAT644 because the credit keyed from the VAT642 remains on file. The trader’s ledger will then show two credits but no debt.
Interest problems on recovery assessments
If you raise an assessment to correct a credit which has been claimed and repaid as an error correction, which you have since discovered to be incorrect, you should be aware of the implications for interest on the assessment you raise. The interest charge may be too high and should be amended as per VAT Civil Penalties guidance.
Error correction period was originally a payment return which was rendered without a remittance.
If the error correction period was originally a payment return which was rendered without a remittance, and you have processed an error correction over-declaration, you should check to see if any default surcharge action occurred between the VAT642 being keyed and the VAT645 (Accept Message) going on file.
If such a situation has occurred, you should contact Banking Operations to take corrective action to reduce or withdraw the surcharge action.