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HMRC internal manual

VAT Reverse Charge

The reverse charge: Consequences of getting it wrong: Minor non-compliance


A supplier who has taken reasonable steps to establish that the reverse charge should apply is not required to account for VAT if the purchaser fails to apply the reverse charge unless the conditions set out in Notice 726 apply to make them jointly and severally liable. Similarly, where VAT has been charged erroneously, penalties are not to be applied unless there has been a tax loss.


If the only error is the reverse charge output tax you should consider raising an assessment for tax misdeclared, with penalties and interest if appropriate, under the normal procedures. Reverse charge output tax due but not declared should be assessed together with any allowance for input tax entitlement not deducted.

Where the error also includes input tax you should read VATF42000.

Further guidance on assessments can be found in the assessments & error correction guidance manual.

Further guidance on penalties can be found in the Compliance Handbook.

Guidance in relation to non-compliance for Reverse Charge Sales Lists can be found in VATREVCHG30000.

Where you suspect disaggregation please see VATREVCHG22200 (This content has been withheld because of exemptions in the Freedom of Information Act 2000) VATREVCHG23200.