Under the new rules, effective for VAT returns
starting on or after 1 July 2008, the limit above which a separate disclosure
is required has been significantly increased. Taxpayers need now only make a
voluntary disclosure (by letter or on form VAT 652) for the lower of:
-
net errors exceeding £10,000;
or, for larger businesses,
-
net errors above £10,000, which are 1 per cent of the (Box 6) turnover
figure or £50,000, whichever is the lower.
However, there are certain aspects of the
adjustment/voluntary disclosure regime that must be noted:
-
The adjustment date is the date the error is
discovered, rather than the date it was made.
-
The new limits only apply to ‘tax periods
beginning on or after 1 July 2008’, so for those completing normal,
quarterly returns, the first applicable return will be September 2008, October
2008 or November 2008 respectively.
-
Default interest will continue to apply to
voluntary disclosures, calculated from the time the error was made to the date
the disclosure is received, but there will still be no
penalties.
The changes mean that default interest will apply
less often, as many more errors can now be adjusted through the appropriate
return, the relevant VAT being accepted as correct tax for that
period.
Although these long-overdue changes are most
welcome, taxpayers should still ensure each return is carefully reviewed and
voluntary disclosures made where applicable. Additional care should be taken in
the transitional period to make sure whether specific errors discovered fall
under the old or new limits. |
