A client has prepared their VAT returns but have failed to pick up Private Use adjustments of his Van and telephone and for claiming one VAT on one invoice twice. I have noticed this whilst preparing the accounts. The total VAT claimed in excess over the course of 9 months totals approx £120. Would HMRC view this as an error 'despite taking reasonable care' (which can be amended through his return) or a 'careless' error? From the examples, I feel they might suggest careless however it seems a bit unfair when someone is starting out in business, doesn't think to ask the question and it is only a small amount.
http://www.hmrc.gov.uk/manuals/chmanual/ch81145.htm
Views welcome
Thanks
Replies (2)
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Is £120 material enough to be concerned?
Although possibly not the "correct" answer; for a relatively small sum, why not just adjust on the next return. At worst, and even if a later inspection picks it up, the fact that it had already been corrected would probly mean a wagging finger and no more. After all interest at (say) 5% over 9 months on £120 is, wow, around £4.50! Unless the "inspector" is a real pedant he would let it go.
I think the "reasonable care" argument is more for repeated infractions and where the VAT man finds the error. As for the accounts, why not put through a sundry prepayment to cover the amount owed to HMRC?
VAT Adjustment
I would just adjust the error on the next VAT return. HMRC are not concerned with minor errors and this amount falls well below the errors notification limits. So just make the adjustment in the next return and retain the supporting documentation in case it is required at an inspection at a later date