Receipts Found

Receipts Found

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Even though receipts paid for personally go in to the books of a client every month for the VAT returns, amazingly over £6k worth of old receipts have just been found. Why do clients do this even though you keep asking for info, and they obviously are putting them through monthly. They date from May 10 to May 12.

Currently prepping the Aug 12 VAT, the late invoices amount to £895 worth of VAT

So as it is under 4 years and under the threshold we can amend this return, But do you still need to file a VAT652? Not sure it falls under the reasonable care section of HMRC notes on VAT errors!

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By HUGH W DUNLOP
21st Sep 2012 20:17

 

 

The following is copied from the HMR & C web. However you must impress upon your client the need for accurate figures. The VAT might question this on the grounds that if he can miss so much tax on purchases, how much is he missing on sales. However, he must report this as if he does not and it is discovered at an inspection, he will be fined, as will you; since by knowing this fact and not declaring it, you are also guilty

You need to tell HMRC's VAT Error Correction Team, in writing, about certain errors. The simplest way to tell them is to use form VAT 652 'Notification of Errors in VAT Returns', which is for reporting errors on previous returns, but you don't have to use form VAT 652 - you can simply write in instead.

You must explain each error in detail by reference to your business records, including:

how the error happenedthe VAT period when the error was madewhether it was an error on input or output taxhow much VAT was under- or over-declaredhow you worked out the errorwhether you're claiming a refund of an overpaymentthe total amount of the error

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By DMGbus
21st Sep 2012 20:38

No need to notify HMRC if...

If the error passes both of the following tests:

1. Less than £10,000

AND

2.  Is overpaid VAT (as opposed to underpaid VAT)

Then there is absolutely no need to notify HMRC.

Form VAT652 is not required either in these circumstances.

However full supporting calculations must be kept to justify any clearly marked adjustment in the VAT account.

There is definitely no penalty for overdeclaring VAT, so any concern about any need for specific disclosure is unfounded.   (Specific disclosure would, however be required were it to be the case that it was an underdeclaration of VAT now being put right).

 

 

 

 

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By HUGH W DUNLOP
21st Sep 2012 22:03

Receipts found

 

6.2 What if I had the evidence on time but still didn’t claim input tax in the right period?

If you had the necessary evidence to enable you to claim the input tax in the VAT accounting period in which it became chargeable, but did not record it in your VAT account, this is an error. You cannot claim it on a later return. You may be required to make a return adjustment under paragraph 4.3 or an error correction notification under paragraph 4.4.

Should you wish to make a claim for input tax you must do so within the time limits described at paragraph 4.7.

 

Please read the full regulations. As previously stated this MAY be construed as a deliberate error, as doubts may be cast on the integrity of output VAT. 

Fewer purchases may lead to fewer sales being declared, though the ratio of purchases to sales may still fall within HMRC ratio tests.

Lack of purchase invoices will also impact on cost of sales for tax purposes, therefore tax returns will also require to be rectified.

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