HMRC relax VAT correction regime
For periods commencing on or after 1 July 2008 HMRC have increased the threshold under which a business can make good errors or mistakes it has previously made when preparing its VAT returns.
Prior to this period any “errors” totalling over £2,000 had to be reported to the VAT man under the “voluntary disclosure" rules. Going forward this has been raised to a minimum of £10,000 with even higher thresholds for businesses with turnover of £1,000,000 who can correct themselves “errors” of up to 1% of turnover up to a limit of £50,000.
I see this as a welcome relaxation of the rules which will help to cut red tape for many businesses.
But beware, as there is no longer “disclosure” when an adjustment is made, then the adjustment will not meet the definition of a “disclosure” for the new penalty regime and hence penalties could still become due.
Date: 11th July, 2008
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