Currently there are two ways in which you can notify of any VAT errors arising in VAT accounting period.
You can disclose the error by adjusting your VAT account and including the value of that adjustment in the next VAT return. From 1 July 2008, the previous net errors threshold of £2,000 has been increased to the greater of £10,000 or 1% of the turnover (box 6 figure on the VAT return) subject to an upper limit of £50,000.
If the net errors total more than £10,000, you must inform your local VAT Business Advice Centre in writing of the errors. If you use this method, you must not make adjustment for the same errors on a later VAT return. HM Revenue & Customs may also charge interest on any under declarations you disclose in this way.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.