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A helpful Budget change is the
increase in the limit below which errors can be adjusted on a VAT
Return. The new rules apply to VAT periods starting on or after 1
July 2008.
Where an adjustment is less than
either £10,000 or 1% of the quarterly turnover (subject to a maximum
of £50,000), then it can be adjusted on a VAT Return.
Adjustments larger than that will
still require a separate written notification to HMRC on a VAT 652.
HMRC figures suggest that this will reduce the number of
notifications by around 70%.
A taxpayer will be entitled to
submit an adjustment under the threshold. This may be helpful if
there is a delay before the next VAT Return is due.
Do notice that new penalty rules
will relate to VAT 652 forms as well as to VAT Returns. Thus, if
there are errors in the adjustment amount, then the taxpayer will be
subject to a penalty. The taxpayer should make sure any adjustment
he makes is correct in principle, and accurate arithmetically.
For the sake of completeness,
similar new rules apply to other Indirect Taxes, such as Insurance
Premium Tax, Airport Passenger Duty, Landfill Tax, Aggregates Levy,
Climate Change Levy.
Fewer businesses are registered for
these taxes.
Les Howard is a freelance VAT
Consultant.
He has dealt largely with charities, and with the motor trade.
He works in association with Elysian Associates Ltd.
January 2008 -
Peterborough UK Community Website
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