HMRC - Overpayments
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If you’ve overpaid VAT, you should aim to correct your VAT as soon as possible.
If an error has been made of less than £10,000 (or with a value between £10,000–£50,000 but of less than 1% of the net outputs of the VAT declaration) you should adjust your VAT account and including the value of the VAT adjustment on your current VAT return.
If the error was of more than £10,000 and over 1% of the VAT return declaration for that period, you should not make an adjustment on your VAT account. Instead, you should contact HMRC to let them know, making sure to give details about how the error occurred, the time period affected by the error, whether the error concerns input tax or output tax, if VAT was underdeclared or overdeclared, how it was calculated, and the total amount to be adjusted.
If HMRC believes the error was made as a result of carelessness (or deliberately), they may choose to issue a penalty.
In some cases, HMRC may choose not to issue a refund. This normally happens in cases where your business has incorrectly charged VAT to customers and is unwilling to refund the overpaid amounts to customers.
- You should always try and resolve any problems with HMRC by talking with the person who has been dealing with you first.
- If this is impossible or has not resolved your issue, you should use Resolver to contact them.
- HMRC operates a tiered complaints system. Complaints will go through two tiers of service.
- If you are still unhappy, you can ask your MP to escalate your complaint to the Parliamentary and Health Ombudsman.
If you believe HMRC has not correctly followed procedure, it's always worthwhile to consider contacting them via Resolver. HMRC may offer compensation for any distress, delay, damage caused, or costs incurred by HMRC (such as the cost of having to hire an accountant).
It's worth knowing that HMRC have the right to take enforcement action to reclaim any debts (under certain conditions).
You should be aware, however, that HMRC field agents have no right of seizure. They might take note of the things you have (your assets), but they can't take any on the spot.
HMRC can level penalties for late payment. It's always worth contacting HMRC if you believe you might have been incorrectly penalised (or if serious circumstances stopped you from paying on time). HMRC will often consider any reasons you might have for late payment.
You should try and correct any mistakes with your tax as soon as possible.
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