VAEC7650 | Error correction for VAT returns: Interest and penalties: Return period with a due date before 1 April 2009

This guidance deals with interest matters in respect of prescribed accounting periods starting on or before 31 December 2022. Interest matters with effect from 01 January 2023 are dealt with under Finance Act 2009.

Please see Compliance Handbook page CH140000 onwards to find the new interest rules guidance.

For return periods with a due date before 1 April 2009 HMRC may issue a misdeclaration penalty, see VCP10700, where there has been a significant lack of care in preparing VAT returns.

Repeated lack of care may result in repeated misdeclaration penalties being issued.

These penalties do not imply any dishonesty or any intention to evade tax. However, if a person deliberately fails to correct an under-declaration of VAT they may be liable to a civil penalty for dishonest evasion, or criminal prosecution, see VCP10301.

We will not issue a misdeclaration penalty if a person discovers an error and either notifies, or corrects the error voluntarily before HMRC begin to make enquiries.

The legislation covering this is at

VATA94/S63(10)(b)

VATA94/S64(5)(b)