Corrective self-assessment: how to easily correct tax errors

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The corrective self-assessment is a procedure that allows taxpayers to correct errors or omissions in their tax returns.

This figure will be introduced from the third quarter of 2024 to simplify tax compliance and reduce litigation with the Tax Administration (In theory)

Through this process, taxpayers can make modifications to their original self-assessments without having to initiate more complex procedures such as the supplementary self-assessment or the submission of documents to the tax agency.

It is essential to know the deadlines and requirements for its correct presentation.

VAT rectification self-assessment

New tax forms

As you know, the way of correcting self-assessments of certain taxes is going to change soon, at the moment, this affects:

VAT
Personal Income Tax
Corporation Tax,
Tax on Fluorinated Gases
Excise Taxes

It is expected that new corrective self-assessment models will be approved, which must be submitted regardless of whether the correction involves a greater payment to be made or a request for a refund of part of the amounts paid or if it does not modify the result.

Corrective self-assessments of VAT

The first self-assessment declaration model that is expected to be approved is that of VAT.

The new model will be applicable from the VAT declaration of September 2024 (for companies that declare every month) or the third quarter (for those that declare quarterly).

Therefore, the new model does not affect self-assessments submitted previously, which must be rectified in the same way as was done until now (with a supplementary or rectifying letter).

Regulatory Context and Legislative Evolution

The regulation of the corrective self-assessment is taking place in a constantly changing regulatory environment, reflecting the intention to optimize tax management in Spain.

Over the last few years, significant reforms have been carried out that have led to a new rectification structure in the tax field.

Law 13/2023 and Amendment to the General Tax Law

Law 13/2023, approved on May 26, 2023, represents a milestone in the modernization of the tax regulatory framework.

It modifies the General Tax Law, Law 58/2003, with the aim of incorporating more effective tools for the rectification of self-assessments.

This legislation seeks to make it easier for taxpayers to correct their errors, promoting transparency and voluntary compliance with tax obligations.

One of the main contributions of Law 13/2023 is the inclusion of the figure of the corrective self-assessment.

This amendment aims to simplify tax procedures for taxpayers, allowing them to correct errors without having to re-submit the entire declaration.

Royal Decree 117/2024 and Involved Regulations

On January 31, 2024, Royal Decree 117/2024 was published in the Official State Gazette.

This decree modifies the regulations that regulate various taxes, such as Personal Income Tax (IRPF), Corporate Tax (IS) and Value Added Tax (VAT).

Its objective is to adapt administrative procedures to the changes introduced by Law 13/2023.

This Royal Decree establishes the specific conditions and procedures for the submission of corrective self-assessments.

It includes guidelines on how the submission process should be, the deadlines and the necessary documentation, guaranteeing a correct application of the new regulations.

Entry into Force and Publications in the BOE

The entry into force of the corrective self-assessment will be effective once the corresponding declaration models are approved, through a ministerial order whose publication in the Official State Gazette is essential.

This formalization process is key to ensuring that taxpayers have the appropriate forms and precise instructions to carry out the rectification of their self-assessments.

Adequate communication of these legislative changes is essential so that taxpayers have clarity about the new procedures, ensuring a smooth transition towards the application of corrective self-assessments.

The proposed regulatory changes are aimed at improving the effectiveness and efficiency of tax management, thus strengthening the relationship between the tax administration and citizens.

System so far (08/26/24)

Until now, if your company detected an error in a tax return submitted, a dual system was applied to rectify and correct the error:

Supplementary Self-Assessment . If the error meant a lower income or a higher refund than correct, your company had to submit a supplementary declaration.
Rectifying letter . If the error had meant paying more or declaring a lower refund, or if the result had not been modified, a letter had to be submitted explaining the error committed, rectifying the self-assessment and, if applicable, requesting a refund of the tax unduly paid.

Definition and Nature of the Rectifying Self-Assessment

The corrective self-assessment emerges as a fundamental tool within tax management, allowing taxpayers to correct errors in their tax returns.

This mechanism not only facilitates compliance with tax obligations, but also improves the relationship between citizens and the tax administration.

Differences with the Original Self-Assessment

It is essential to distinguish between the original self-assessment and the corrective self-assessment, since both fulfill different functions in the fiscal field.

The original self-assessment refers to the initial process where the taxpayer calculates and pays his taxes, while the corrective self-assessment is used to correct errors that have been detected in said original self-assessment.

Function: The original self-assessment establishes the taxpayer’s tax debt, while the corrective self-assessment allows the taxpayer to modify and adjust that initial declaration.
Process: The original self-assessment is an autonomous act that must be submitted within a certain period. On the other hand, the corrective self-assessment involves a correction process that must be carried out within the established period to avoid sanctions.
Consequences: The presentation of a corrective self-assessment can lead to the return of income in the event that the taxpayer has overpaid, which does not occur when presenting an original self-assessment.

Purpose and Uses of the Corrective Self-Assessment

The main purpose of the corrective self-assessment is to correct errors or omissions in the original self-assessments. Its use is essential to ensure that the information presented to the tax administration is accurate and reflects the true tax situation of the taxpayer.

Error Correction: It allows taxpayers to rectify errors in calculations, application of deductions and any other discrepancies in their declaration.
Optimization of Tax Compliance: It makes it easier for taxpayers to correctly comply with their tax obligations, reducing the risk of sanctions.
Litigation Prevention: By providing a simple and agile mechanism to correct errors, the possibility of legal conflicts with the tax administration is minimized (we insist, in theory *)

Process for Submitting Corrective Self-Assessments

The process for filing corrective self-assessments is structured into several key steps that taxpayers must follow.

Each stage is critical to ensure that corrections are made properly and within the established deadlines.

Identifying the Error in the Original Return

The first step in the correction process is to identify the error in the original return. This may be a calculation error, an omission of income, or the incorrect application of deductions.

To carry out this task, it is recommended that the taxpayer thoroughly review their self-assessment and related documentation.

A detailed assessment will allow any discrepancies that may exist to be accurately detected.

Calculating the Amount to Pay or Refund

Once the error has been identified, the next step is to calculate the amount to be rectified. Depending on the nature of the error, this may involve:

Determining whether an additional amount should be paid.
Calculating the amount to be refunded if the correction results in a balance in favor of the taxpayer.

The calculation must be based on the current tax regulations and on the correct data that correspond to the particular situation of the taxpayer. It is advisable to use calculation tools or consult a professional to ensure the accuracy of the data.

Deadline for Submission of the Corrective Self-Assessment and Conservation of Documents

The submission of the corrective self-assessment must be made within a maximum period of four years from the end of the period of submission of the original declaration.

Logically, if the corrective self-assessment is to pay more and is submitted after the deadline, you will have to pay the surcharge.

This deadline is essential, since a late submission may lead to penalties or the impossibility of rectification.

In addition, it is necessary to keep all documents that justify the error and the calculations made.

This documentation is key in case the Tax Agency requires a review or a discrepancy occurs in the future.

Filing the Application

Once the previous steps have been completed, the corrective self-assessment will be formally filed.

This process includes completing the corresponding form, which must comply with the specifications established by the Tax Authority for this type of declaration.

It is important to verify that the form is correctly completed and that all the necessary information is included.

The filing can be done through the channels established by the Tax Agency, which generally allow online options in addition to in-person ones.

Finally, it is recommended to keep a record of the corrective self-assessment filed, as well as any communication received from the Administration, for future reference.

Advantages of Using the Rectifying Self-Assessment

The corrective self-assessment is presented as an effective solution to correct tax errors. Its numerous advantages not only benefit taxpayers, but also improve tax management in general.

Simplicity and Accessibility

One of the main advantages of the corrective self-assessment is its simplicity.

This procedure reduces the bureaucracy associated with the correction of errors, making it easier for taxpayers to make adjustments to their declarations without having to deal with excessively complicated procedures.

This system adapts to the nature of each taxpayer, allowing anyone, regardless of their level of tax knowledge, to access it.

The ease of filing corrective self-assessments encourages more proactive compliance with tax obligations.

Reduction of Litigation (in theory)

The possibility of correcting errors directly and easily contributes to reducing the number of conflicts that may arise between taxpayers and the Tax Administration.

By facilitating the rectification of errors, unnecessary disputes that take up time and resources of both parties are avoided.

Less litigation means more harmonious relations between citizens and the administration, as well as a more efficient environment where claims are resolved quickly and effectively.

Administrative Efficiency and Resolution Times

The implementation of corrective self-assessments provides the Tax Agency with a more optimized operational framework.

By managing rectifications more effectively, response times and the effectiveness in resolving submitted self-assessments are improved.

Resolution times are generally shorter compared to more traditional procedures or supplementary self-assessments.

The ability to process these rectifications quickly has a favorable impact on the public administration, allowing more resources to be devoted to other, possibly more complex areas.

Elimination of Penalties or NOT

Filing a corrective self-assessment within the established deadline and without having received a prior request means that the taxpayer can avoid penalties.

This advantage is fundamental, as it provides an opportunity for self-correction without the fear of negative repercussions.

The elimination of penalties when acting voluntarily increases the credibility of the corrective self-assessment figure as a proactive compliance tool, favoring those who seek to be responsible with their tax obligations.

However, if the Treasury reviews your corrective self-assessment and finds that it is wrong, THEY CAN PENALTY YOU.

Immediate Returns (THE BEST)

The presentation of corrective self-assessments allows taxpayers who have paid in excess to receive their tax refunds in an agile and supposedly fast manner, we will see…

This efficient process is crucial in situations where the taxpayer has made a mistake and needs to recover a significant amount.

The immediacy of the returns fosters a climate of trust and satisfaction among citizens, since a more attentive and dynamic tax system is perceived to meet the needs of taxpayers.

This improves the relationship between the administration and citizens by reducing waiting times and the uncertainty connected to the return processes.

Consequences of filing a corrective self-assessment: the reaction of the AEAT

Until now, these corrections that are detrimental to the Treasury were first subject to a check by the Treasury.

Thus, after reviewing the allegations and evidence provided, the Treasury could issue a negative resolution or a new liquidation that modified the declared quota.

However, with the new corrective self-assessments, in general the errors committed will be considered automatically rectified, proceeding to make the resulting refunds more quickly or even immediately, without the need to process a procedure.

Possible sanctions from the Treasury

Well, although the Treasury justifies this measure by saying that it will save paperwork and time to resolve these errors, the truth is that there is a new risk to take into account:

Until now, the rectification document that had to be submitted in these cases did not have the character of a liquidation, so the company could not be sanctioned.

In order to impose a sanction, it is necessary that there is an erroneous liquidation.

However, with the new system the taxpayer must issue a new self-assessment which, as it is a tax assessment (and not just a request), can be penalised by the Treasury if, after a subsequent check, it is considered to be incorrect.

Plan ahead

If you are planning to rectify any tax self-assessment submitted in recent years (within the four-year limitation period), consider doing so before the regulations for that tax are adapted to the new rectification system.

In this way, you will avoid the risk of a penalty if the Treasury does not agree with the requested rectification.

Common Errors and Reasons for Filing Corrective Self-Assessments

Taxpayers may face various errors when filing their self-assessments.

These errors may be due to confusion in calculations or incorrect interpretation of the regulations.

Detecting these errors is essential to correct the situation and avoid future conflicts.

Errors in the Calculation of the Taxable Base

One of the most common errors when filing self-assessments is the incorrect calculation of the taxable base.

This can happen for various reasons:

Inaccuracy in the sum of income obtained during the fiscal year.
Omission of deductible expenses that must be considered to reduce the taxable base.
Confusion in the application of tax rates, which can lead to an incorrect amount to be declared.

A thorough review of accounting documents can help mitigate this type of error.

Incorrect Application of Deductions or Bonuses

Deductions and bonuses are tax benefits that can reduce the taxpayer’s tax burden.

However, incorrect application can lead to filing an incorrect self-assessment.

Common errors include:

Failing to meet the requirements for accessing certain deductions.
Applying deductions cumulatively when they are not applicable.
Omitting deductions to which one is entitled, which can result in paying more than necessary.

Regulations on deductions can change each year, which forces taxpayers to be well informed.

Declaration of Undeclared Income

A common error is an incomplete declaration of income. This can occur for various reasons, such as:

Income from secondary activities that has not been taken into account.
Error in the accounting of exceptional income that has occurred during the year.
Confusion regarding the classification of certain income that may be subject to taxation.

It is essential to keep a rigorous record of all income generated to avoid problems with the Tax Agency.

Omission of Relevant Data

The omission of relevant information and data in the tax return may trigger the need to file a corrective tax return.

The most common omissions include:

Personal data that has not been updated or corrected, which may affect the linkage of the return.
Failure to include certain assets or goods that must be declared.
Omissions related to tax deductions specific to personal situations, such as disability or large family.

A detailed analysis of the original self-assessment is key to detecting such omissions.

Legislative Changes

Tax reforms are frequent and can alter what is known as the taxpayers’ tax situations. These changes may involve:

The inclusion of new regulations that directly affect previous deductions.
Changes in the tax base that must be considered in the new self-assessment.
Changes that cancel previously available bonuses, which requires adjusting the self-assessment to the new regulations.

It is recommended that taxpayers keep up to date with tax updates to avoid errors in their returns.

Advantages and disadvantages of corrective self-assessment

Advantages of the new corrective orders

The start of a verification procedure in the event that the Treasury disagrees with the corrective order will always provide more options for defence than the denial of a correction (suitability of the procedure, expiry, motivation, extension of the scope of actions…).

When the Administration resolved a request for rectification, none of this could be alleged (there is no expiry, there are no consequences of excessive duration, the motivation is not so relevant…) Appeal filed only for substantive reasons, difficult to find formal defects.

Disadvantages of the new corrective orders

Late payment interest

Previously, it was always in favour of the taxpayer, because he had already paid the tax debt. The time taken by the Treasury could even be considered a good investment, at a rate of 3.5% or 4%. There was no liquidity, but if the estimation of the correction seemed probable, the money would be recovered with a juicy interest.

With the corrective orders, it is just the opposite. For the moment, the taxpayer’s interpretation is required, but if the Treasury regularizes the debt, it will demand the amount received by the taxpayer, with late payment interest

Fear of rectifying due to the consequences of the rectification being rejected and the taxpayer being required to return the tax savings obtained with the rectification.

This is especially true in cases of high value. If the Treasury takes a long time to regularize, we can talk about interest of 3 or 4 years.

And, in addition, on the horizon, the possibility of being sanctioned for requesting an incorrect refund, or for paying a lower tax debt

This “fear” of rectifying can mean a violation of the right to effective judicial protection.

Many taxpayers may not exercise their right in cases with a certain amount of substance, given the foreseeable regularization and demand for the tax debt with interest and penalty.

With the additional uncertainty that the Administration has 4 years to check.

Previously, this occurred when a taxpayer had not declared correctly in a fiscal year.

Now it can happen to a taxpayer with an impeccable situation, who is afraid of having to take on the same debt that he intends to save with interest and penalties.