HMRC has confirmed plans to legislate for a new general obligation on taxpayers to correct errors in their VAT returns and other documents once they become aware of them. Draft legislation is expected in 2026 to enact the changes. This is a meaningful shift in how HMRC expects businesses and individuals to manage their own compliance — and the penalty consequences of getting it wrong are being tightened significantly.

Taxpayers will have an explicit duty to correct an inaccuracy as soon as they become aware of it (or notify HMRC where a direct correction isn’t possible). If no reasonable steps are taken, the error will be treated as deliberate, with the higher penalties and longer assessment windows that carries.

Further, HMRC will introduce a ‘Customer Correction Notice’ requiring taxpayers to confirm no errors have been made.  Any errors HMRC later find when scrutinising that response will be presumed careless by default — shifting the burden onto the taxpayer to prove they took reasonable care.

In short, the introduction of legal expectation, shifts the burden of notifying HMRC of errors to taxpayers, and inaction on a known error risks a deliberate-error penalty. The safest approach is to resolve uncertainties on your own terms now, rather than under the reversed burden of proof that follows a notice. If you have any doubts about past returns, we’d recommend a proactive VAT health check to understand any unknown VAT risks or errors lurking in your VAT accounting.  BBVAT has experience of dealing with businesses in a range of sectors and defending HMRC challenges accordingly.

The full text of the publication is available on the GOV.UK website. Organisations who require guidance on their specific circumstances are encouraged to contact our free VAT helpline on info@BBVAT.co.uk as errors can result in assessments, interest and penalties.