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VAT Error - Small

I've just noticed that a client has forgot to adjust the FRS rate in their last VAT return (period ending Jan 11). Only one invoice applied at the new rate and the error only stands at a total of £13. Now, although this can be corrected in the next return, is it really worth writing to HMRC to consider a reduction in penalty of a careless error? I've read "The Light Touch" HMRC guidance, where they will be operating a 'light touch' in terms of errors made in the first VAT return after the change. Are they really interested in applying a penalty for £13??? 



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01st Mar 2011 14:27

Of course not..

Just adjust it next time.

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01st Mar 2011 14:29

Notify error to HMRC

You are correct! unless an error, and its explanation, is notified to HMRC, the 'quality' of the disclosure is insufficient to achieve the maximum reduction in penalty! Customs have so far failed to address this issue properly. Strictly you should disclose the error to HMRC (and you can do it by email), as well as making the adjustment on the Return. You may feel it is a waste of time, with a maximum penalty being £13 x 30%; I would simply make the adjustment in the VAT Account.

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01st Mar 2011 15:54

if any was needed

final confirmation that the world has gone stark raving bonkers

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By RFox
01st Mar 2011 16:44

Less than £10,000

I thaught errors of less tha £10k can be amended in the next vat return and no need to be notified to HMRC.

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02nd Mar 2011 12:18

Penalties and Notification

You are correct that adjustments up to £10,000 can be made on a VAT Return. But the new penalty rules require notification of the error to HMRC, with a reduction in the penalty for 'Quality' of disclosure. A mere adjustment on a Return does not constitute detailed disclosure.

HMRC do need to provide some explicit guidance on this issue.

and yes, the world has gone stark raving bonkers!


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