Commentary

V7.297 Revised HMRC policy on timing errors

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.297 Revised HMRC policy on timing errors

Part V7 Tax planning | Commentary

V7.297 Revised HMRC policy on timing errors

The legislation imposes a penalty of 5% per annum, adjusted on a time basis (eg 1.25% for three months) where an error corrects itself on the following VAT return, eg a sales invoice entered late or purchase invoice entered early (the latter problem applied in the case of GD and Mrs D Lewis – see V7.296). The previous HMRC policy was that both VAT returns must have been submitted by the taxpayer before the timing penalty applied – so that HMRC could see the automatic correction of the error in the following period.

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