1. Overview

1.1 What this notice is about

This notice explains how to:

• amend your VAT records if you discover they contain errors
• correct errors you discover on VAT Returns you’ve already sent to us
• claim a refund if you’ve overpaid VAT,VAT, or not claimed enough credit on a return
• claim a refund of VAT ifwhere you disagree with our decision on the VAT treatment of a supply
• claim a refund of VAT ifwhere our practices in relation to VAT are being challenged in the court

If you find an error in accounting for VAT that is not covered by this notice, you should contact the VAT helpline.

1.2 How we can help you to get your VAT Returns right the first time

Errors on your VAT Returnerrors can prove costly to you and to us. IfFailure youto do not correct errors,errors youcan couldresult bein liable to a penalty and interest. For more on this see section 4.

Reading this notice can help you avoid errors. This notice explains how you can correct them if they do occur.

2. Errors found in records

2.1 If you find errors in your VAT records

IfWhere you find errorsthat in your VAT records,records you’llcontain errors, you will need to correct them. Readthem. sectionParagraph 2.2 for2.2 anexplains explanationhow onyou howcan do that.

This guidance only applies to declarations of UK VAT and does not apply to VAT MOSS Returns, as these contain declarations of VAT due in other EU member states. To correct errors.errors in declarations of VAT due in other member states, you will need to follow the rules of the relevant EU member state. If you need assistance with this then you should contact the member state using the details in this list of contact points.

If you’vethat madeadvice does not fit your particular circumstances, you may need further help from our VAT helpline or you may wish to consult your own tax adviser.

Where an error has led to a misdeclaration on a VAT Return you’ve already sent to us, readyou sectioncan 4correct tothe finderror outby howfollowing tothe correctadvice thein error.section 4.

2.2 If you record or workcalculate out your VAT incorrectly

If you finddiscover you’ve recorded an errorentry in your business records beforeincorrectly submittingand	then
you have not yet completed your VAT Return,account or return for the period in which you made the error	you can correct thisthe error by amending your records. Keep Simply keep a clear note to show the reason for the errorerror, and include the correct VAT figure in your VAT account for the same period. The correct VAT figure will then work its way through to your VAT Return. IfReturn, as normal.
you’ve already submittedsent us your VATreturn	you Return,will youneed shouldto followcorrect the correctionerror processby following the procedures in section 4. 4.

3. Errors on invoices

3.1 If the wrong amount of VAT was shown on an invoice

This section does not apply ifwhere there’s been a change in the consideration for the supply.supply, Forthat example,is, if the price has changed and consequently the amount of VAT has also changed. You can find more information in section 18 of VAT Notice 700.VAT.

If the wrong amount of VAT was shown on an invoice, this section explains how you can correct it.

For example, ifwhere you’ve:you have:

• made aan arithmetical mistake in workingcalculating out the tax value or the VAT element of the supply
• charged VAT on a supply, butwhere no VAT was due

3.2 InvoicesAmount you’ve issued

If the amount of VAT shown on aan VAT invoice you have issued is:

is wrong

• higher

If than the amount properlyshown due,on the invoice you issued was	then you must
too high	account for the higher amount in your records,records
too unless you correct the error with your customer by issuing a credit note lower than the amount properly due, then you must low	account for the correct amount of VAT due whether or not you correctshould thehave error with your customer (for example, by issuing a supplementary invoice for the amount undercharged)charged

You

3.3 canAmount findof moreVAT informationshown on creditan notesinvoice inyou sectionsreceived 18is and 19 of VAT Notice 700.

3.3 Invoices you’ve receivedwrong

If the amount of VAT shown on an invoice you received is: too high, is	then you must
too high	go back to your supplier for a replacement invoice reducing the amount of VAT charged
too low, then you must low	go back to your supplier for a replacement invoice increasing the amount of VAT charged

If

4. theCorrecting amount of VAT shownerrors on ana invoicereturn youalready receivedsubmitted

4.1 isErrors incorrectdiscovered andfor your VAT return isperiods duebeginning youon must:

• submitor theafter return1 accountingApril for2008 thewith amounta ofdue VATdate shown on theor invoice
• notafter adjust1 theApril VAT

2009

YouThe canPenalties adjustfor yourErrors next VAT return if both the following apply:regime:

• you’veerrors receivedor relevantinaccuracies documentation,relating liketo areturn creditperiods notebeginning on or replacementafter invoice
• this1 isApril within2008 where the errordue correctiondate limitsfor describedthe inreturn sectionis 4

4.on Correctingor VATafter errors1 onApril a2009 returnwill alreadybe submitted

4.1liable Penaltiesto fora errors

You’llpenalty faceif penaltiesthey forare anycareless errorsor indeliberate

if youra returnperson thatdiscovers area carelessnon-careless orerror, deliberate. YouHMRC expects that they will nottake needsteps to paycorrect ait penalty– if youthe makeperson andoes errornot despitetake takingsteps reasonableto care.

Ancorrect errorit, isthe carelessinaccuracy ifwill yoube failtreated toas takecareless the care and attentiona thatpenalty couldwill be expecteddue

• careless fromor adeliberate reasonableinaccuracies personrelating into thereturns circumstances.

  Ifcommencing youon discoveror an error after making1 aApril return2008 thatwith wasa neitherdue carelessdate on or deliberateafter when1 youApril sent2009, itthat toare HMRC,being youcorrected mustusing takemethod steps1 toor correct2 it.(see Ifparagraph you4.2), dowill not,be we’llsubject treatto the errornew aspenalty careless.

  Ifregime

• where youcareless canor correctdeliberate anbehaviour errorresults thatin youan madeincorrect despiteerror takingcorrection reasonablenotification carebeing usingmade under method 12 (read(see sectionparagraph 4.3),4.2) you will notbe needsubject to make a disclosurepenalty toif HMRC.

  Ifit youis correctcorrecting errors made on returns commencing on or after 1 April 2008 with a carelessdue errordate usingon methodor 1,after you1 mustApril tell2009 us– aboutthis it,applies regardless of itswhether sizethe original errors were made despite taking reasonable care or value,not

• in toorder receivefor aHMRC lowerto penalty. Theconsider penaltyany willreduction beto lowera ifpenalty, you should tell us aboutif anyou errorhave beforemade youa havecareless reasonerror toor believedeliberate thatinaccuracy we’veregardless foundof outits aboutsize it.

  Ifor you’vevalue adjusted– analthough errorwe underalso methodneed 1,separate butdisclosure you’refor notthe surepurpose whetherof HMRCreducing wouldany considerpenalty, itcareless careless,errors youmay canbe stilladjusted either:

  • sendon usyour annext errorVAT correctionReturn notification
  • writesubject to usthe tolimits makedescribed ain disclosurethis section

  You

• correction mustof notifydeliberate HMRCinaccuracies aboutmust, anyhowever, deliberatealways errors,be innotified writing,to orHMRC using anform errorVAT652, correctionsee notificationbelow underfor methodmore 2information (read– sectionin 4.4).such Youcircumstances you should complete the VAT652 and provide a description of the error,inaccuracy explaining– howtell andus whythe itfull happened.amount Youof mustthe alsoinaccuracy includeand theexplain fullhow amountand ofwhy the inaccuracy.inaccuracy Youarose can(continue continue on a separate sheet if necessary.

  Ifnecessary)

• if you sendhave adjusted a letter,careless iterror or inaccuracy on your return that is within the limits described below you may still write to HMRC asking us to consider any reduction to a penalty – your letter should contain the same information you’dthat needis torequired include on anform errorVAT652, correctionbut notification.it’s Youimportant mustthat you also tell us that you’veyou have made the adjustment on your return. 

  Latereturn payment– interestthe majority of such errors will applynot ifbe careless or deliberate, so no penalty will be due – people make mistakes and we do not expect perfection – when considering whether an error meanswas thatcareless, youwe didare notsimply payseeking allto establish whether the VATperson payablehas bytaken the duecare dateand forattention thethat VATcould period.be Learnexpected morefrom abouta VATreasonable penaltiesperson andtaking interest.

  reasonable care in similar circumstances

4.2 Methods for correcting errors

There are 2 methods for correcting errors.errors:

Method

• method 1 is– for either:
  • errors of a net value that do not exceed £10,000
  • £10,000, or errors of a net value between £10,000 and £50,000 that do not exceed the limit described in sectionparagraph 4.3

  Method

• method 2 is– for either:
  • errors of a net value between £10,000 and £50,000 that exceed the limit in sectionparagraph 4.3
  • , or for net errors greater than £50,000£50,000.00, or if you so choose, for errors of any size

  YouSee canparagraph also4.6 chooseand toparagraph use4.7 methodfor 2further todetails reporton errorstime oflimits anyand size.the transitional period extending the time limits from 3 to 4 years.

  4.3 Method 1

  YouFor canerrors useof thisa methodnet tovalue adjustthat yourdo VATnot account,exceed if£10,000, you’veor accountederrors forof tooa muchnet orvalue toobetween little£10,000 taxand £50,000 that are within the limits described below.

  You can use this method to adjust your VAT account and include the value of that adjustment on your current VAT Return,Return asproviding long as the:

  • net value of errors found on previous returns does not exceed £10,000
  • net value of errors found on previous returns is between £10,000 and £50,000 but does not exceed 1% of the box 6 (net outputs) VAT Return declaration due for the return period in which you discover the errors are discovered

  WorkTo work out the net value of VAT errors on previous returns, byyou calculatingshould work out the:

  • total amount due to us, if any
  • total amount due to you, if any

  If the difference between the 2 figures is greater than £10,000 and exceeds 1% of the box 6 (net outputs) VAT Return declaration due for the current return period during which youthe discoverederror theis error,discovered, you must use method 2.

  You must always use method 2 if the net errors exceed £50,000 or if you made the errors made on previous returns were made deliberately.

  Correcting errors using method 1 is not a disclosure for the purposes of the penaltynew penalties rules described inat sectionparagraph 4.1.4.1. If you consider that the error corrected using method 1 was a result of careless conduct you will not be able to gain the maximum reduction of the penalty unless you also tell us separately in writing, either by letter or by completion of anthe errorform correctionVAT652, notification,of about both:

  • the error
  • your grounds for seeking a reduction to the penalty

  This will be an unprompted or prompted disclosure depending on the circumstances.

  4.4 Method 2

  YouFor musterrors useof thisa methodnet value between £10,000 and notify£50,000 HMRCwhich separatelyexceed the limits described below, or errors which exceed £50,000 or for errors of theany errorsize.

  You must use this method if the:

  • net value of errors found on previous returns is between £10,000 and £50,000 and exceeds 1% of the box 6 (net outputs) VAT Return declaration due for the current return period during which you discovered the error was discovered
  • net value of errors found on previous returns is greater than £50,000
  • you made the errors on previous returns were made deliberately

  You canmay, alsoif you wish, use this method for errors of any size which are below the limits inat sectionparagraph 4.3,4.3 instead of a method 1 error correction. If you use this method you must not make adjustment for the same errors on a later VAT Return.

  IfWhen you’renotifying notHMRC sureof whichan methoderror tocorrection use,you should use form VAT652. This can be printed or you can checkrequest howa toform tellby HMRCcontacting aboutthe VAT Return errorshelpline.

  4.5

  If Howyou’re unable to tellobtain HMRCa aboutform anyou error

  Youshould, canby reportreference errorsto business records in your possession, write to HMRCthe onlineappropriate office at paragraph 4.11. You’lland needprovide tofull includedetails of the followingerrors information:including:

  • how each error arose
  • the VAT accounting period in which it occurred
  • if it was an input tax or output tax error
  • the VAT underdeclared or overdeclared in each VAT period
  • how you workedcalculated out the VAT underdeclared or overdeclared
  • whether any of the errors resulted in you paying us an amount that was not due
  • the total amount to be adjusted

  If you’rethe makingerror was an amount underdeclared include sufficient detail about the error on a refundseparate claim,sheet if necessary, to enable us to decide whether we should charge interest. You can onlyfind acceptfurther itinformation ifabout youinterest providein allDefault thisinterest information.(VAT Notice 700/43).

  4.64.5 IfWhich youmethod cannotshould I use

  If the onlinenet service

  Notificationsvalue inof writingerrors mustdo includenot yourexceed VAT£10,000 registrationor number.are Sendbetween them£10,000 toand £50,000 but do not exceed 1% of the box 6 (net outputs) VAT ErrorReturn Correctiondeclaration Teamdue byfor postthe at:

  BTcurrent VAT
  HMRC
  BX9return 1WR

  Youperiod during which the errors are discovered, you can alsouse contactmethod us1 by:or 2.

  • telephone:

    If 0300they 200are 3700

  • email: inbox.btcnevaterrorcorrection@hmrc.gov.uk

  4.7between The£10,000 timeand limit£50,000 forand correctingexceed errors

  The1% timeof limitthe forbox error6 corrections(net isoutputs) 4VAT yearsReturn fromdeclaration the:

  • enddue offor the prescribedcurrent accounting period induring which the errorerrors occurredare fordiscovered, under-declaredor andare over-declaredgreater outputthan tax£50,000 andyou over-claimedmust inputuse tax
  • duemethod date2.

    If of the returnerrors on previous returns were made deliberately you must use method 2.

    4.6 The time limit for thecorrecting prescribederrors

    You accountingcannot periodadjust inyour whichVAT theReturn, or make an error occurredcorrection notification, for underany claimederrors inputthat tax

  Therearose in accounting periods that are 2outside exceptions:

  • the time oflimits supplyat (taxparagraph 4.6.1 and paragraph 4.7. You may however be able to correct tax point errors)errors, where you’veyou have declared an amount of VAT on the return that immediately precedes or follows the return for which the amount was due, provided the later return isremains withinin time under the 4-year timecapping limit
  • provisions.

    4.6.1 Transitional arrangements for the 4-yearincrease in time limitlimits doesfrom not3 applyyears to deliberate4 errors

  years

  4.8

  The Whentime limit for adjusting returns and correcting errors, including making claims, was increased with effect from 1 April 2009 from 3 years to correct4 errors

  years. However, in order to make sure that accounting periods that were out-of-time on 31 March 2009 are not brought back in-time by the change, transitional arrangements have been put in place.

  AsThe soontransitional asarrangements youprovide findthat anno error,adjustment recordor iterror incorrection yournotification VATmade recordsbetween 1 April 2009 and 31 March 2010 can be made for correction.any accounting period ending before 1 April 2006.

  YouFor instance, on 31 March 2009 the earliest accounting period for which a claim may findbe itmade usefulfor toa keeprefund of overdeclared output tax under section 80(1) Value Added Tax Act 1994 is the accounting period ending on 31 March 2006 (the old 3-year rule).

  On 30 April 2009, the earliest accounting period for which a separateclaim recordmay inbe yourmade currentunder VATsection account80(1) would be that youending on 30 April 2006.

  Similarly, on 31 October 2009 the earliest accounting period that can updatebe ifclaimed youfor discoverwill errors.also Yoube should:that ending on 30 April 2006.

  • show

    However, by 30 April 2010, the 4-year time limit will have come fully into effect so that a claim made on that date youcan discoverstill thego error

  • showback theto perioda inquarter whichending theon error30 occurred
  • identifyApril any2006.

    For relatednon-standard documentation

  • identifytax whetherperiods, thereturn adjustments and error wascorrection outputnotifications made between 1 April 2009 and 1 April 2010 can be made for any accounting period ending on or after 1 April 2006. Adjustment thereafter will be subject to a 4-year limit.

    4.7 The time limit for claiming input tax

    The related

  time limit for making claims was increased with effect from 1 April 2009 from 3 years to 4. However, in order to make sure that the accounting periods that were out-of-time on 31 March 2009 are not brought back in-time by the change, the following transitional arrangements apply.

  The recordtransitional willarrangements helpprovide youthat decideno whetherclaim methodmade between 1 orApril method2009 2and is31 March 2010 can be made for any accounting period for which the appropriateVAT methodReturn towas usedue whenbefore correcting1 errors.April You2006.

  Thus, shouldon normally31 waitMarch until2009, the endearliest accounting period for which a claim may be made is that ending on 28 February 2006 (for which the due date of the currentreturn was 31 March 2006).

  On 30 April 2009, the earliest accounting period beforefor makingwhich thisa decision.claim However,may ifbe anmade individualunder errorregulation is29 sowould largebe that ending on 31 March 2006 (the due date of the 1%return boxfor 6the testperiod orbeing £50,00030 limitApril referred2006).

  Similarly, toon in section31 4.4 willOctober 2009, the earliest accounting period that can be breached,claimed youfor mustwill immediatelyalso makebe anthat errorending correctionon notification31 March 2006. However, by 30 April 2010, the 4-year time limit will have come fully into effect so that a claim made on that date can go back to HMRC,the usingquarter methodending 2.31 March 2006.

  4.94.8 If you do not correct VAT errors and HMRC finds them

  4.8.1 For accounting periods prior to the introduction of the Penalties for Errors regime the following procedures apply

  (See paragraph 4.1.)

  If we find underdeclaredunderdeclarations of VAT on your returns, we’llwe will assess for the tax due and may charge you interest. You may also face a misdeclaration penalty. To avoid a penalty, you must disclose the full details of anythe errorsmistakes before we begin to make enquiries into your VAT affairs.

  Enquiries normally begin when we make an appointment to inspect your records. We’llBut we will accept disclosures for penalty purposes after this point, unless we have reason to believe that that:

  • you alreadydiscovered knew about the errors,errors earlier and only disclosed them only because ofyou had been told that a visit was to be made
  • your disclosure during or after a visit was prompted by our enquiries.
    enquiries into your affairs

  You should make an error correction by following the procedures in sectionsat 4.3 and 4.4.paragraphs 4.3 to 4.5. If, however, you deliberately fail to correct an underdeclaration of VAT, you may be liable to a civil penalty for dishonest evasion or even criminal prosecution.

  You can find further information:information in:

  • in VAT guide (VAT Notice 700 700)
  • in Misdeclaration Codeand ofrepeat Practicemisdeclaration 9:penalties where(VAT HMRCNotice suspects700/42)
  • Civil fraudpenalty (COP9)investigations statement of practice. (VAT Notice 730)

  4.8.2 For accounting periods after the introduction of the Penalties for Errors regime the following procedures apply

  Read(See sectionparagraph 4.1.)

  If we find underdeclarations of VAT on your VAT Returns, we will assess for informationthe abouttax penaltiesdue and may charge interest. You may also be liable to a penalty.

  You should make an error correction by following the procedures at paragraphs 4.3 to 4.6.

  See paragraph 4.1 for errorsmore information in arelation VATto Return.error correction and the penalties for errors regime.

  4.104.9 Correcting errors that have little effect on the net VAT that you declared

  There may be timesoccasions when large output and input tax errors have a smallnil or nominimal effect on the net VAT due on returns. If the net value of errors you’ve found on previous VAT Returns is within the limit showndescribed in sectionparagraph 4.2,4.2, you can choose either method 1 or 2 (described in paragraphs 4.3 and 4.4)4.4) to correct the errors. For In order for us to consider any reduction to a penalty, you mustshould tell us if you’veyou have made a careless error or deliberate errorinaccuracy in individual VAT Return declarations,declarations nounderstating matterliability theto pay VAT, or overstating entitlement to a VAT credit, regardless of its size or value.

  4.114.10 Adjustments that are not errors

  AdjustmentsProvided they are accurate and made at the right time, adjustments that you needare required to make as part of the normal operation of VAT accounting are not errors, and are covered by other VAT accounting provisions. This is as long as:errors.

  • they’re accurate
  • you make them at the right time

  These accounting adjustments include:

  • retail scheme annual adjustments, or other adjustments required when a person stops using a particular retail scheme
  • adjustments under the Capital Goods Scheme
  • an approved estimation procedure
  • partial exemption adjustments
  • partial exemption clawback and payback adjustments
  • exports and intra-EC supplies of goods within the European Commission
  • issuing or receiving credit and debit notes
  • claims for bad debt relief
  • pre-registration and post deregistration expenses
  • adjustments for valid prompt payment discounts

  If the original accounting adjustment was incorrect, or made at the wrong time, you’llerror needcorrections should be made in the normal way.

  4.11 Where to makesend error correction notifications

  Separate notification of error corrections should include the person’s VAT registration number and be sent to the VAT Error Correction Team office at:

  BT VAT
  HMRC
  BX9 1WR
  

  Telephone: 0300 200 3700

  Email: inbox.btcnevaterrorcorrection@hmrc.gov.uk

  4.12 When to correct errors

  As soon as you find an error, you should record it in your VAT records for correction or you could become liable to a penalty.

  You may find it useful to keep a separate record in your current VAT account that you can update as errors are discovered. You should:

  • show the normaldate way.the error was discovered
  • show the period in which the error occurred
  • identify any related documentation
  • identify whether the error was output or input tax related

  At the end of your current VAT period, the record will help you decide whether method 1 or method 2 is the appropriate method to use when correcting errors.

  You should normally wait until the end of the current accounting period before deciding whether method 1 or method 2 applies.

  However, if an individual error is so large that the 1% box 6 test, or £50,000 limit, referred to in paragraph 4.4 will inevitably be breached, you should make an error correction report to HMRC using method 2 immediately.

  5. How to claim a refund

  5.1 Accounting for output tax that was not due

  IfWhere you’veyou have accounted for an amount of output tax tothat HMRC that was not duedue, and this was within the last 4 years, depending on the amountamount, (read section 4.2) you can either:

  • either adjust your return for the period in which you discover the overoverdeclaration declaration
  • or you should claim a refund by making an error correction notification

  notification. Section 4 tells you which method you should use. You should correct all other known errors at the same time.

  Readtime, sectionprovided 4they forfall informationwithin aboutthe bothtime methodslimits andexplained howat theparagraph 4-year4.6 timeand limitparagraph works. 4.7.

  We will not pay a claim which would result in your unjust enrichment.enrichment This– isfor example, where you’ve:you have:

  • passed the mistaken VAT charge on to your customer who bore the burden of the mistaken charge but are unable, or do not intend, to pass on to them any repayment resulting from the claim
  • not suffered any loss or damage by charging a higher price than you needed to

  ReadYou can find further information about unjust enrichment and the arrangements for reimbursing customers in section 9.9.

  5.2

  If you’veyou’re beennot chargedsure outputif taxyou’re incorrectly

  Ifentitled to claim, you thinkshould you’veask beenyour wronglyVAT chargedbusiness ancentre amountor asthe VAT byhelpline yourfor supplier,advice.

  6. thisNot isclaiming aenough commercialinput matter.tax Youon shouldyour seekprevious areturns

  6.1 refundWhen fromare youryou supplier.entitled Ifto youclaim overpaidinput yourtax

  The suppliertime andlimit yourdescribed supplierin accountedparagraph to4.7 HMRC for adeducting correspondinginput amount,tax theystarts canto makerun afrom refundthe claimdue todate HMRCfor inthe orderreturn that you’re liable to reimbursemake you.after Claimsyou tohave HMRCboth byincurred suppliersthe forinput amountstax overpaidand asreceived the associated VAT areinvoice.

  In limitedpractice, tomost atraders 4-yearwill period.deduct Readany sectioninput 4.7tax forthey moreare informationentitled to on the timenext limitVAT forReturn correctingafter errors.

  6.they Nothave claimingreceived enoughthe inputinvoice taxfrom ontheir your previous returns

  supplier.

  6.16.2 ClaimingHaving inputthe tax

  Youevidence canon claimtime inputbut taxstill afternot youclaiming have both:

  • incurred the input tax
  • received in the associated VAT invoice
  right period

  If you couldhad notthe necessary evidence to enable you to claim the input tax in anythe taxVAT accounting period becausein youwhich it became chargeable, but did not holdrecord theit in your VAT invoiceaccount, atthis theis time,an youerror. canYou cannot claim it inon a later periodreturn. onYou yourmay VATbe return.required Thisto mustmake bea withinreturn theadjustment 4-yearunder timeparagraph limit4.3 describedor inan sectionerror 4.7.correction notification under paragraph 4.4.

  IfShould you hadwish theto necessarymake evidencea inclaim thefor input tax periodyou butmust diddo notso claim,within thenthe thattime returnlimits isdescribed inat error.paragraph 4.7.

  7. Correction of errors under paragraph 4.4

  7.1 What happens after you make an error correction notification

  7.1

  Each Whenerror wenotification mayis contactsubject you

  to checks to protect both the revenue and the interests of taxpayers generally.

  We may sometimes need to contact you to clarify the details of your notification before we process it. In some cases it may also be necessary to visit you to verify it.it, We’llusually agreeat a mutually convenient date and timetime. forOur theofficers visitwill try to deal with you.any queries as swiftly as possible.

  7.2 How we’llwe will notify you

  Once we’vewe have processed your errorError correction,Correction, we’llwe will send you a noticeNotice of Error Correction confirming the amount of your Error Correction and any interest calculated on it. We’llYou will also sendget a statementStatement of Account showing the current balance payable to us (including any interest),interest) or repayable to you.

  If your correction generated a repayment that is subject to the unjust enrichment provisions detailed in section 9,9 we’llwe will not send you these documents, but we will writetell to you toseparately tellby you.letter.

  If you do not hear from us within 4021 working days, contact theyour VAT Error Correction Team using the contact details in section 4.6 to make sure they’ve received your error correction notification.

  7.3 PaymentsPay ornet repaymentsamounts of amountsVAT due to HMRC

  If we’ve notified you in line with sectionwith 7.2 andparagraph 7.2 and the statementStatement of Account shows a current balance payable to us, ityou willshould includesend full payment as soon as possible to:

  The Controller
  HM Revenue and Customs
  VAT Central Unit
  Alexander House
  21 Victoria Avenue
  Southend-on-Sea
  SS99 1AA
  

  We may charge further interest if you do not pay the VAT in full within 30 days from the calculation date shown on the Notice of Error Correction.

  You can pay electronically by:

  • Bacs Payment Schemes Limited (Bacs)
  • Clearing House Automated Payment System (CHAPS)
  • similar bank-operated systems

  You can ask our helpline for details of waysthese payment methods.

  If you pay by Bacs or CHAPS your bank will need to quote your VAT registration number as your reference and make payment to:

  • sort code – 08 32 00
  • account no – 11963155

  If you prefer, you can pay. by cheque or postal order.

  7.4

  Make Howcheques we’llor postal orders payable to HMRC with a line through any spaces on the pay line. You should put your VAT registration number on the reverse of your cheque.

  Do not send post-dated cheques.

  In your own interest, do not send notes or coins through the post.

  7.4 HMRC repaying net amounts due to you

  If we’vethe notifiedamount shown on your error correction notification leads to an amount repayable to you we will credit the amount due to your account and use it to reduce any outstanding balance to us. Additionally, where you are claiming output tax wrongly charged on supplies that have turned out to be exempt, any input tax that you deducted in linerelation with sectionto 7.2 andthose supplies will be set against the statementamount showsclaimed.

  If, afollowing currentthis, balancemoney payableis still due to you, itwe will includerepay detailsthe ofremainder howeither we’llby makeBacs theor payment.Payable Order.

  8. If you disagree with a decision or ruling

  8.1 How to make a claim if you disagree with our decision or ruling

  OnceWhere we’vewe have given you a decision or ruling concerning your VAT liabilities,liabilities we’llwe will normally reject any claim from you which challenges our decision or ruling.

  If your claim is formally rejected you canwill be invited to apply for a review of our decision. You have 30 days in which to apply.accept this offer.

  If you do not want a review, or if you do not agree with the result of the review, you can appeal to the First-tier Tribunal to decide the matter.

  If you’veyou madeappeal ayou validwill claimpreserve andyour appeal,entitlement andto oura decisionrefund, isbut overturned,only you’llif beyou entitledhave tomade a refund.

  valid claim, should our decision be overruled. If however you dodecide not appeal,to appeal to the tribunal then any future claimclaims will be:

  • abe considered to be new claim
  • claims, whether made on the same basis or not, and will be subject to the normal time limits as detailed in sectionparagraph 4.6 and paragraph 4.7
  .

  8.2 Further information on reviews and appeals

  FindThere outis howmore toinformation about what you can do if you disagree with aour tax decision orin penaltyfactsheet HMRC1 and What to do if you disagree with an HMRC decision.

  9. Unjust enrichment and the reimbursement scheme

  9.1 What is unjust enrichment is

  ForThis taxsection purposes,only applies to claims made on or after 26 May 2005 claiming a refund or credit of overdeclared output tax. The unjust enrichment isprovisions whenfor someoneclaims benefitsmade frombefore athat taxdate refund,are not included in this notice but theirare customercovered boreby theRevenue cost& Customs Brief 05/09.

  We will refuse claims for unjust enrichment where a trader:

  • has charged VAT to his customers that he ought not have charged
  • has passed the amounteconomic burden of taxthe wrongly charged.
    charged VAT on to his customers
  • has suffered no loss or damage as a result of having passed the mistaken charge to his customers
  • is unable or unwilling to reimburse his customers with any amounts paid to him by HMRC

  We may refuseinvoke the defence of unjust enrichment in circumstances where you make a claim for over-declareda credit of VAT relating to output tax ifaccounted wefor findin error.

  Unjust enrichment can be applied in respect of the full amount of output tax that you’veyou passedhave overcharged and accounted for in error. However, HMRC will only pay you what is left after all outstanding liabilities have been taken into account. For example, where you’re claiming output tax wrongly charged on supplies that have turned out to be exempt, any input tax that you deducted in relation to those supplies may be set against the economicamount burdenclaimed.

  Unjust enrichment can also be applied to only part of a claim. In certain cases you may have passed on only part of the VAT charged in error to your customer.customer because you chose to absorb the costs to some of the mistaken charge in order to remain competitive.

  9.2 What are the reimbursement scheme arrangements

  WeUnder willthese notarrangements refuseyou can obtain a claimrefund onof VAT you accounted for in error (which your business customers or non-VAT-registered customers paid to you), and avoid being unjustly enriched by passing it back to the groundspeople who bore the burden of unjustthe enrichment,mistaken charge to VAT. But you can only do so if you both:agree to use the reimbursement scheme (‘the scheme’).

  • 9.3 If you do not wish or are unable to refund the money

    If you agree that repayment would unjustly enrich you but you do not wish, or are unable, to reimburserefund any money to your customers you cannot obtain a refund from us.

    The reimbursement scheme applies where you accept, or we prove, that by receiving a refund of sums wrongly accounted for as output tax your business would be unjustly enriched at your customers’ expense and you wish to refund (to those customers who bore the burden of the mistaken charge to VAT) the money they overpaid. If your customer

  • can meetwas able to deduct all your mistaken VAT charge as input tax we will not regard them as having borne the conditionsburden of HMRC’sthe reimbursementcharge.

    In such cases we will only make a refund of overpaid VAT if you agree to reimburse those customers in accordance with the terms of the scheme.

    9.4 Who can use the scheme

  ForAll thisbusinesses purpose,currently aregistered customerfor includesVAT everyonewho you’vewish madeto salesrefund to,to whethertheir they’repast customers any money they overpaid as VAT can use the scheme.

  You can also use the scheme if you’re no longer registered for VAT or– not.you will be subject to the same terms and conditions as VAT-registered businesses.

  9.29.5 HMRC’sAppeal reimbursementwhen schemeyour claim has been rejected

  ToThe meetexistence of the conditionsscheme does not affect your right to claim that you would not be unjustly enriched.

  If we reject your claim on the grounds of unjust enrichment, you still have the right of appeal.

  If the tribunal finds in our favour you can still use the scheme if you wish.

  9.6 Conditions when you could get a refund

  Under the reimbursement scheme,scheme we will only make a refund to you must:if you agree to:

  • sign an undertaking in the format set out in sectionin 10 ofsection 10 of this notice —– once signed, you cannot amend this once you’ve signed it
  • refundmake all ofrefunds yourto customers within 90 days
  • repay any residual amounts not returned to your customers after 90 days to HMRCus within 14 days (we– we will not send reminders)reminders —– if you fail to do this we’llwe will assess for the residue
  • pass any statutory interest paid with the refunds to yourcustomers, customers — this is subject to the same terms and conditions as the refund

  You

  9.7 cannotRecords useto the reimbursement scheme if your customer is VAT registered and recovered the overcharged VAT as input tax.

  keep

  You must also keep the following records, the:records:

  • names and addresses of thethose customers you intend to reimburse
  • total amount of money paid to each of your customerscustomer
  • amount of interest, if applicable, paid to each of your customerscustomer
  • date you refunded the money

  9.8 Who counts as a customer

  YouYour mustcustomers not– takecalled out‘Consumers’ ofin the refundregulations any– costsinclude youeveryone incurto inwhom administeringyou thehave scheme.made Ifsales, youwhether do,they we’llare normallyregistered assessfor you.VAT or not.

  9.9 Making repayments

  You canshould stillhave use the scheme evenready ifto you’reimplement noas longersoon registeredas forwe VAT.receive You’llyour besigned subjectundertaking and begin contacting customers straight away.

  A late start to refunding the samemoney termswithout andgood conditionscause will not be seen as VAT-registereda businesses.valid reason for extending the 90 day refund limit.

  9.39.10 Repaying statutory interest to you

  IfWe you’rewill duepay aany repayment,statutory youinterest mayclaim, alsowhere receivethe interest.sums Readbeing morereimbursed aboutwere repaymentwrongly interestaccounted onfor VATbecause creditsof orour overpayments.

  Iferror. weAny paystatutory interest,interest paid under this willscheme beis subject to the same terms and conditions as any other money refundedreturned under the scheme.schemes Youand you must passrefund thisit on to your customers. This is because it is the customers inwho full.were deprived of the use of the money, not you (as the claimant) who collected it from them to pay to us.

  You must payrefund back any statutory interest in full. You must return any residue (any amounts that you’veyou have been unable to passrefund) on to yourus customers within the specified time limit of 14 days.

  9.4

  If youyou’re dohaving notdifficulty wishworking out how much interest is due to useyour thecustomers, reimbursementyour scheme

  Iflocal youVAT agreebusiness thatadvice youcentre wouldwill be unjustlyhappy enrichedto butprovide doa notprintout wantof to,the orstatutory cannotinterest refundcalculation. yourThis customerswill (forshow example,interest ifon youa cannotperiod-by-period identifybasis. them),You will then yoube cannotable getto divide interest payable for a refundparticular fromperiod us.

  Theinto existencethe ofamount overpaid for the schemesame doesperiod. notThis affectshould yourdetermine rightapproximately what’s due to claimyour thatcustomers youfor woulda notparticular beperiod.

  9.11 unjustlyChecks enriched,HMRC ormay appealmake

  To tomake sure that you’re refunding your customers in the tribunalagreed ifmanner, we rejectmay ask to see your claim.scheme records. We will give you written notice of our intention to see these records.

  If

  9.12 Charging costs you incur to the tribunalrefunds

  You findsmust innot ourtake favourout of the refund any costs you canincur stillin useadministering the scheme. If you do, we will assess you.

  10. Undertaking for the reimbursement scheme

  In relation to a claim for £(insert amount) made on (insert date) relating to prescribed accounting period(s) (insert accounting period(s)) made under section 80 VATAVAT A 1994. In accordance with the terms of section 80A VATA 1994 and regulations 43A to 43G of the Value Added Tax Act Regulations 1995, Part VA Reimbursement Arrangements (Statutory Instrument 1995/2518), I agree to comply with the following reimbursement arrangements.

  ‘I, the undersigned, can identify the names and addresses of consumers whom I intend to reimburse. I will reimburse those persons, in cash or by cheque, all of the amount credited by HMRC under section 80(1) or 80(1A) of the VAT Act 1994, together with any associated interest, without any deduction, for whatever purpose, within 90 days of receiving the credit and I understand that I cannot use the credit for any other purpose. Furthermore, where some or all of the credited amount to be reimbursed has been paid or repaid to me and I have not reimbursed some or all of it to consumers, I will, without reminder, notify HMRC and return the balance together with any associated interest to HMRC within 14 days of the 90 days expiring. Where the credited amount has not been paid or repaid to me, and I have not reimbursed some or all of it to consumers, I will notify HMRC of that amount of credit and associated interest I have not reimbursed to consumers within 14 days of the 90 days expiring. I will keep the necessary records as set out in the Regulations and I will comply with any notice given to me by HMRC about producing the records I am required to keep.’

  Signature……………………………………………………………………………………….

  Position in business……………………………………………………………………………

  Name……………………………………………………………………………………………

  Address…………………………………………………………………………………………

  ……………………………………………………………………………………………………

  ………………………………………………………………………………………………….

  VAT Registration Number……………………………………………………………………

  Your rights and obligations

  Read theYour HMRC Charter to find out what you can expect from HMRC and what we expect from you.

  Help us improve this notice

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