New rules for VAT errors
September 22nd, 2009
Following a change in VAT rules, the three-year limit for correcting errors in VAT returns is being changed to four years. From April 1 2010, any errors relating to the previous four year period will need to be adjusted for.
If the VAT effect of the error is less than £10,000, you can adjust your next VAT return. If it exceeds this amount, you need to advise the Taxman in writing and provide him with full details of the error. Do not also adjust your VAT return as this may result in double accounting for the VAT.
The Taxman may charge a penalty for underpaid VAT if he thinks you didn’t take ‘reasonable care’. It is best practice to advise him of errors of less than £10,000, if only to show willingness for full disclosure as this may reduce or even eliminate the risk of him charging a penalty.
The content of this article is for general information only. It should not be relied on and action which could affect your business or personal circumstances should not be taken without appropriate professional advice.
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