Correcting errors

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Correcting errors
  • Types of errors
  • Methods of error correction
  • Time limits
  • HMRC discovers errors
  • Adjustments which are not errors
  • VAT refunds
  • Submitting an error notification
  • Processing the error
  • Other matters
  • Appeals
  • Practical points

This document discusses these in detail together with the procedure to be followed to correct these errors; the time limits; the penalty regime; VAT refunds; submitting an error notification; processing the error; and appeals.


This guidance note provides an overview of the correct procedure that should beadopted by a business that discovers it has made an error in respect of its VAT accounting records or returns A summary of the error correction procedure can befound in Flowchart correct errors on previous VAT returns SI 1995 2518 regs 34 35 VAT Notice 700 45 VAEC7100 De Voil Indirect Tax Service V5 159 V5 159C V7 285 Types of errors The following provides an overview of the typical types of errors and the procedure that needs to beused to correct the error Records If a business ascertains that it has made an error in the VAT books and records then it will need to correct these errors If the error has resulted in incorrect figures being declared on a submitted VAT return the business may beable to correct the error on a later VAT return see below It should benoted that if HMRC concludes the business has deliberately failed to correct an under declaration on a VAT return the business could beliable to a financial penalty or even criminal prosecution See the Fraud civil investigation COP9 offer made from 30 June 2014 overview and Overview of criminal investigations guidance notes for more information If the business discovers it has made an error in respect of its VAT records and the error covers a period in which the VAT return has not been submitted it is entitled to correct the error by amending its records The business must ensure that it keeps clear records of the adjustments undertaken and keeps supporting documentation where applicable Invoicing If the business discovers it has shown the incorrect VAT amount on a sales invoice that has been issued such as calculating the wrong amount of VAT or incorrectly charging VAT on the invoice then one of the following must betaken if the amount of VAT charged is too high

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