VAT on supplier invoices - processing incorrect VAT

Over the next few days and weeks, businesses will receive invoices with a mixture of 17.5% and 15% VAT. In general the VAT amount analysed on the supplier's invoice should be recorded, to match the supplier's record of invoices raised .

But what if you spot that 17.5% has been charged when only 15% is appropriate?

HMRC have said:

1. Only 15% should be claimed as input tax. You may ask your supplier to provide you with a credit note for the over charged VAT.
2. But when auditing businesses, they will usually accept a claim of 17.5% as they "will assume that the supplier has followed the accounting documents unless there is good reason to suppose otherwise "
   

Pending receipt of a requested credit note, one option is for the customer to record a dummy credit note to reduce the amount claimable, and reduce the amount payable to the supplier. This can be reversed if the original invoice is found to be correct.

Likewise if a supplier notices that invoices were raised at 17.5% which should have been 15%, they should raise a credit note and notify their customer. Otherwise the full 17.5% should be accounted to HMRC as output tax.

Clearly it is in everyone's interests to avoid such problems. It's worth raising invoices right first time.