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Correcting errors on a VAT return

By Andrew Needham, February 2021

Andrew Needham looks at what methods are available to correct errors on a VAT return.

When a business discovers it has made a VAT mistake it needs to correct it in order to avoid paying additional interest and penalties, but it has to follow certain procedures or it could still find itself still liable to a penalty.

What type of error?

The error correction procedure has two separate elements. Errors under £10,000 can be adjusted on the VAT return, and on the face of it there are no penalties or interest to pay. Errors over £10,000 must be notified to HMRC separately, and are subject to interest and penalties ranging from:

  • up to 30% for a careless error; 
  • up to 70% where it is found to be deliberate; and
  • up to 100% where it is both deliberate and concealed.

HMRC takes the view that most penalties are careless, so the normal

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