Questions and Answers
I complete my own VAT returns for my business. Reviewing my records for my tax return, I realise I have made some mistakes. How do I go about correcting these and will I be liable to penalties and interest?
Most errors can simply be adjusted on your next VAT return. To qualify for this treatment, the errors must meet the following three criteria.
• They are below the reporting threshold
• They were not deliberate
• They relate to a period less than 4 years ago.
As it is possible for errors to both increase and decrease your liability, you need to determine the net value of the errors (the final increase or decrease in liability once all have been corrected). This is the figure you use to determine if you are over the reporting threshold. You meet the reporting threshold requirement if the net value of errors is
• less than £10,000 or
• if above £10,000, less than 1% of your box 6 figure (sales excluding VAT) up to a maximum of £50,000.
If legitimately adjusted on a later return, such errors will not attract penalties or interest.
If you do not meet these criteria, you will need to disclose the errors separately using from VAT652. On this form you will need to list each error individually. The details you need to include for each are the return affected, the effect on each entry on that return and the reason for the error. You can find form VAT652 on the HMRC website (tinyurl.com/jmtcprt), though the form itself will need to be printed for posting to HMRC. Once they have reviewed the form, HMRC will send you a notice confirming if they agree your calculation and the amount of VAT and interest you owe. They will also apply a penalty between 10% and 30% of the amount due if they consider the errors arose from carelessness on your part.
Regardless of how you correct your errors, you should keep a detailed record of them. This will not only help you in keeping track of your own records, it will also be useful for dealing with any queries arising from a later VAT inspection by HMRC.
I am employed, but I am also a member of a professional body with an annual subscription fee. Is there any way of getting tax relief on these payments?
You can only claim for the cost of being a member of a professional body if said body is related to your employment. The professional body must also be on HMRC’s list of approved professional bodies. The list of professional bodies HMRC will accept can be found here. (tinyurl.com/lzaagut)
Note that this only applies to the normal annual fees you pay. Life membership subscriptions do not qualify as a claimable expense. For obvious reasons, you also cannot make a claim for fees paid by someone else, such as your employer.
If you already complete a tax return, then these expenses can be reclaimed through the employment pages of said return. Otherwise you can make the using from P87 (either online or by post using a printed form) or by telephone. Details of how to make the claim, along with links to the relevant forms, can be found here. (tinyurl.com/y8ovfkqn)
I have submitted my 2017/18 tax return in advance of the 31st January 2019 deadline, but now realise I have made a mistake. Is there any way I can amend it?
You have 12 months from the filing deadline for a return to make any corrections. Assuming your return was issued normally, that means that you have until 31st January 2020 to correct your error. If your return was issued late then the time limit will be extended dependent on how late the return was issued. Regardless, you should always seek to make corrections as soon as you discover them to minimise any additional costs arising.
If you submitted your return electronically, then you can submit an amended return using the same route. If you submitted your return on paper, then you only need to send corrected versions of any affected pages, not the entire return. Each page you send should be marked “Amended” to show they are replacing the original pages.
If the change results in more tax being due, you should make sure you pay this in good time with any other liability. Depending on the nature of the correction, you may also be liable to an additional penalty. If this is the case, HMRC will notify you. Submitting a corrected return in this way is seen as voluntary unprompted disclosure, so any penalties that do arise should be minimised.
If the change results in tax being due back to you, your amended return should include details of how you wish the refund to be paid.
We hope you have enjoyed reading this article. The future of our volunteer led, non-profit publication would be far more secure with the aid of a small donation. It only takes a minute and we would be very grateful.