How does the inaccuracy penalty affect the VAT error correction procedure?
The VAT error correction procedure (previously the voluntary disclosure regime) corrects errors on past returns. No penalty was due if the taxpayer voluntarily disclosed the error to HMRC or if they had a ‘reasonable excuse’. Under the new regime customers are still expected to disclose errors. Most voluntary disclosures are of mistakes made despite taking reasonable care, so will still incur no penalty. If they are below the de minimis level they can be corrected on the next return – see our guidance on how to correct VAT errors. For careless errors, penalties can still be reduced to nil if a full unprompted disclosure is made. This means telling HMRC about the error, helping to determine the correct amount of tax due and allowing access to the figures to check the result. Simply correcting an error on the next return is not an unprompted disclosure. If a business makes repeated disclosures of the same sort of errors then HMRC may have to consider whether this is failure to take reaso
