HM Revenue and Customs Brief 24/11
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Issued on 7 July 2011
Withdrawal of Business Brief 28/04 item 2 issued 25 October
VAT - correcting liability errors made by HMRC
Business Brief 28/04 item 2, 'VAT - correcting liability
errors', will be withdrawn with effect from 1 August 2011. This
withdrawal is to take account of the announcement concerning the VAT
Misdirection Extra Statutory Concession 3.5 on 1 April 2009 in Revenue
& Customs Brief 15/09. This is available on the HM Revenue
& Customs (HMRC) internet site at Revenue
& Customs Brief 15/09.
Revenue & Customs Brief 15/09 confirmed that HMRC is
bound by incorrect advice only in the circumstances explained in 'When
you can rely on information provided by HM Revenue & Customs
(HMRC)'. This is available on the HMRC internet site at When
can rely on information or advice provided by HM Revenue &
Taxpayers will usually only be required to apply the new
interpretation of the law from a current or future date that HMRC will
announce when advising on the correct interpretation.
If, following HMRC's announcement of its new interpretation of
the law, a business nevertheless chooses to correct historical errors,
HMRC will accept the corrections providing all of the following
conditions are met:
- all past errors are corrected
- the neutrality of the tax is respected
- the business is no better off and the Exchequer no worse
off than they would have been if the mistaken interpretation had not
As explained in Business Brief 28/04, taxpayers will not
usually be required to register in respect of previous supplies they
had treated as exempt based on HMRC's interpretation of the law at the
time of supply.
For example, a court rules that supplies previously regarded
by HMRC as exempt were, and had always been, liable to VAT. HMRC would
not usually require businesses affected by such rulings to register for
VAT in relation to taxable supplies they made prior to the court
decision. Businesses that choose to register for periods prior to the
binding court decision on liability must satisfy the normal rules for
VAT registration. They must also apply correct accounting procedures,
including those for exempt supplies and associated input tax
restrictions. They must also be able to submit supporting calculations
and evidence any input tax deductions.
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© Crown Copyright 2011.
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Article Published/Sorted/Amended on Scopulus 2011-07-12 11:20:01 in Tax Articles