VAT timelimits

VAT timelimits

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Hi to All,

One of my clients who has a business of travel agency. He normally charges an extra 3% on the receipts made by credit cards. He never charged an additional VAT on the 3%. Now he realised that he must pay an additional VAT on the extra 3% charge. The question is that how long can he go back to account for the VAT? There is a rule of 4 years to rectify the errors but it does not fall in the lists of errors mentioned in the VAT notice. 

Kind Regards

Replies (4)

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Quack
By Constantly Confused
08th Jun 2012 09:16

First things first

I thought the charge for using a credit card was exempt?  Though I feel like there has been a case recently that I can't find...

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By Steve Kesby
08th Jun 2012 12:36

4 years

The case Constantly Confused can't find is Everything Everwhere (T-Mobile). The credit card charge takes the liability of the main supply.

The limit's four years for HMRC assessing innocent errors, so you're also not obliged to notify them of/make a voluntary declaration going back further than that.

Your question though was how far back your client can go. He can go back as far as he likes. HMRC won't mind! :)

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Quack
By Constantly Confused
08th Jun 2012 14:41

Is there any danger

Ahhh I was looking far too recently, I thought it had been a case in the last few months.

Is there any danger of HMRC claiming fraud and going back 20 years, or is that just for the other taxes? 

Just to add, provided HMRC agree the error was careless/innocent and provided you let them know before they let YOU know, there shouldn't be any penalties (though in theory they could charge up to... 30% of the unpaid VAT for returns starting after April 2008).

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By Steve Kesby
08th Jun 2012 15:44

Yes to 20 years

If there's a deliberate VAT loss, or you knowingly participate in an arrangement that causes a VAT loss, or fail to register, or fail to disclose the use of a notifiable VAT avoidance scheme, then HMRC can assess back 20 years.

Since this is a change in everybody's understanding (everywhere!), and I don't think HMRC have issued a brief on it yet, I think reasonable care can probably be claimed.

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