VAEC7700 | Error correction for VAT returns: Interest and penalties: Deliberate inaccuracies

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.

Deliberate inaccuracies in previously submitted returns cannot be adjusted in a later VAT return. They are known from the outset and therefore cannot be ‘discovered’.

A person should make a separate disclosure to HMRC of any deliberate inaccuracies in previously submitted VAT returns. See VAEC7120 for guidance on making separate notifications.

An error correction notification can be used for this purpose. It will be an unprompted or prompted disclosure depending upon the circumstances. See CH82420 for further guidance on what constitutes an unprompted and prompted disclosure.

The time limit for correcting deliberate inaccuracies in previously submitted VAT returns mirrors the time limit within which HMRC can assess under-declared or over-claimed VAT resulting from deliberate inaccuracies.

This means that disclosures can be made in respect of VAT returns submitted for the previous 20 years. See VAEC2000 for guidance on assessing time limits.

The legislation that supports deliberate inaccuracies is

SI 1995/2518/Reg34

S77(4)/VATA94

Sch24/Para13/FA07