Tyas & Company
Chartered Accountants, Registered Auditors, Tax, Business Advisors
Thursday, 25 February 2016 15:31

Correcting VAT liability errors

The Revenue & Customs Brief 24/11 entitled 'VAT – correcting liability errors made by HMRC' announced the withdrawal of Business Brief 28/04 item 2, 'VAT - correcting liability errors' with effect from 1 August 2011. The brief stated that where a business chose to register for VAT belatedly in respect of supplies that had previously been treated as exempt but should have been treated as taxable then HM Customs and Excise (HMCE) would not pursue tax under the misdirection class concession to the extent that it had not been passed on to the customers (net of input tax).

The changes resulted in the removal of a well-known VAT misdirection Extra-Statutory Concession (ESC) 3.5 in cases of VAT liability change. The ESC was withdrawn as in HMRC’s view, case law was sufficiently clear in scenarios where HMRC has given incorrect advice when in full possession of the facts. HMRC is bound by incorrect advice only in certain circumstances.

However, HMRC has continued to receive registrations for VAT in which businesses specifically request HMRC not to pursue net tax due on supplies where VAT has not been passed on to customers. From 1 August 2016 HMRC will no longer routinely consider requests not to pursue the tax due. Any new requests must be received by HMRC VAT registration service on or before 31 July 2016.


More in this category: « Deferring VAT and tax payments

Contact Us

Our expert team are here to help.
Click to contact us


Book an Appointment

We're just a phone call or a click away
Click to book a meeting


Ask a question

Need some advice. Ask us now.
Click to send a message


Our tax app

Check out our free Tax App.
Click for more details


Stephen Tyas                             Stephen Ayres



Registered to carry on audit work in the UK as GBJ
Limited Liability Partnership by the Institute of
Chartered Accountants in England and Wales

Contact Us

Telephone: 01293 843900

Fax: 01293 614312

Email: office@tyas.com

5 East Park, Crawley, West Sussex, RH10 6AN



This website uses cookies to manage authentication, navigation and other functions. By using our website, you agree that we can place these types of cookies on your device.   Our Privacy Policy