14 August 2008Paragraph 2.4 of VAT Public Notice 700/43 ‘Default interest’ explains the circumstances in which default interest will not be charged. These include net errors below the de minimis limits for inclusion on the next return and the following:VAT declared on returns but unpaid;assessments raised because you have failed to render a VAT return (excluding additional assessments);penalties;interest; andamendments made to VAT returns before they are fully processed.A recent court case decision has demonstrated that the current practice is incorrect. Consequently, from 1 September 2008, all notifications of errors, which have historically been called ‘voluntary disclosures’, and which require an assessment to be issued, could become subject to an additional default interest charge.The amount involved will be irrelevant. Note, however, that net errors below the de minimis limits, which can be corrected on a VAT return and thus do not require an assessment to be issued, will constitute ‘correct tax’ for the period in which the correction is made and therefore will continue not to attract interest.
Content by: Business Made Simple
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