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HMRC internal manual

VAT Statutory Interest Manual

Official error case law: no obligation on HMRC to search for errors

In the case of Avco Trust plc, (VTD 16251) the Tribunal commented that

‘….there is no duty upon the Commissioners to search for errors in a taxpayers affairs and advise him how to correct those errors. If they are asked for advice or a ruling then they are under a duty to give that advice; or if they offer advice having noticed a mistake then they are committed to that advice and if they are wrong there may be an error within the meaning of section 78…’

Another appeal case is:

Newton and Newton - and - C&E Commissioners, MAN/92/1160 (VTD 11372)

’ It has been said many times that VAT is a tax that requires the taxpayer to determine its liability to the Commissioners. The burden to determine the correct amount of tax to be paid or reclaimed is a burden borne by the taxpayer. The Commissioners officers are not conducting an audit of a taxpayer’s accounts when they carry out an inspection visit. Their function is to verify the returns submitted on the basis of the information supplied to them. They are not required to conduct an in-depth investigation. It is not unreasonable for a taxpayer to expect an investigating officer to give guidance when requested or when a problem is obvious to the officer. In this case the inspecting officers could not be expected to consider all the assets of the business and how they were being financed or provided….. Those officers could not have been expected to have any knowledge of the returns submitted by the appellant or the way the figures had been calculated….’

VATA s78