When a person fails to charge and account for the correct amount of output VAT or does not recover the correct amount of input tax, it is considered as an error.

1. VAT Errors and ways to rectify them
When a person fails to charge and account for the correct amount of output VAT or
does not recover the correct amount of input tax, it is considered as an error. This is
applicable even if the taxpayer has overpaid or under-paid the amount to FTA.
How to correct an error in tax invoice and treatment in tax return?
If the tax amount on the invoice exceeds the correct amount, then the supplier must
include the tax amount stated on the invoice within its tax return. If the error has
been corrected by issuing a credit note, this is not applicable.
Cases wherein the amount on the invoice is on the lower side, the supplier should
account for the correct amount of tax on its tax return.
Even if the tax originally charged was high or low, the error must be corrected by the
supplier. If the tax charged is high, then a credit note must be issued and if the tax
charged is lesser than the correct amount, a tax invoice with the correction must be
issued.
For example, if a supplier charges VAT on a zero-rated supply, then a credit note for
the VAT the customer has paid must be issued to him. If VAT has not been charged on
a standard rated supply by mistake, the tax-invoice with the correct VAT amount must
be issued.
What should a recipient of tax invoice with error do?
The recipient must contact the supplier and request a credit note or an invoice, with
the correct amount of tax stated in it. For a recipient to recover input tax, a valid tax
invoice for the supply, showing the correct amount of tax charged is mandatory.
What is the recourse that should be adopted if there is an error in FTA assessment?

2. If the assessment issued by the FTA contains an error, it is considered as a tax error
and should be corrected in the same manner as an error made by the taxable person.
It is the value of the error that determines the way of correction.
The error should either be corrected in the tax return for the period in which it was
discovered, or a voluntary disclosure should be submitted.
When is Voluntary disclosure required?
a. If the error is discovered at a time when it cannot be corrected in the tax return,
then a voluntary disclosure should be submitted to FTA (for example if the taxable
person is no longer registered) or
b. If the tax value of the error is more than AED 10,000, a voluntary disclosure is
mandatory.
When the taxable person notices an error, he/ she should submit the disclosure
within 20 business days.
What is the time limit the FTA has for assessments or by when can a taxable person
disclose errors to FTA?
Errors can be corrected within a time period of 5 years. The FTA can raise an
assessment for, or a taxable person can report any error that occurred within 5 years
from the end of the tax period in which the error occurred, to the FTA.
This is not applicable in the case of tax evasion or non-registration. In these cases, the
FTA can conduct a tax assessment up to 15 years from the end of the tax period in
which the tax evasion occurred or from the date on which the taxable person should
have been registered.
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3. VAT Errors and ways to rectify them
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