Budget – VAT, errors in returns

Current regulations permit the correction of errors in VAT calculations to be made via a trader's VAT return where the error results gives rise to a net VAT under-declaration of £2,000, or less. Errors resulting in excess of £2,000 VAT owing fall to be separately notified by the trader to Customs.

For accounting periods from July 2008 onwards, the £2,000 limit will be increased to the greater of either £10,000 or 1% of the trader's net VAT turnover (subject to an upper limit on the net error of £50,000).

Similar changes will be introduced errors in the returns for insurance premium tax, air passenger duty, landfill tax, climate change levy and aggregates levy.