The Value Added Tax (Accounting and Records) Regulations 1989

Correction of returns

5.—(1) This regulation applies where a person has, in accordance with Regulations made under the Act, furnished a return, or returns, to the Controller which overstated or understated to any extent his liability to tax or his entitlement to a payment under section 14(5) of the Act.

(2) In this regulation–

(a) “under-declarations of liability” means the aggregate of–

(i) the amount (if any) by which credit for input tax was overstated in any return, and

(ii) the amount (if any) by which output tax was understated in any return; and

(b) “over-declarations of liability” means the aggregate of–

(i) the amount (if any) by which credit for input tax was understated in any return, and

(ii) the amount (if any) by which output tax was overstated in any return.

(3) Where, in relation to all such overstatements or understatements that are discovered during a prescribed accounting period, the difference between–

(a) under-declarations of liability, and

(b) over-declarations of liability

does not exceed £1000 then the taxable person may correct his value added tax account in accordance with this regulation.

(4) In the tax payable portion–

(a) where the amount of any overstatements of output tax is greater than the amount of any understatements of output tax a negative entry shall be made for the amount of the excess; or

(b) where the amount of any understatements of output tax is greater than the amount of any overstatements of output tax a positive entry shall be made for the amount of the excess.

(5) In the tax allowable portion–

(a) where the amount of any overstatements of credit for input tax is greater than the amount of any understatements of credit for input tax a negative entry shall be made for the amount of the excess; or

(b) where the amount of any understatements of credit for input tax is greater than the amount of any overstatements of credit for input tax a positive entry shall be made for the amount of the excess.

(6) Every entry required by this regulation shall–

(a) be made in that part of the value added tax account which relates to the prescribed accounting period in which the overstatements or understatements in any earlier returns were discovered;

(b) make reference to the returns to which it applies; and

(c) make reference to such documentation as relates to the overstatements or understatements.

(7) Where the conditions referred to in paragraph (3) of this regulation do not apply then the value added tax account may not be corrected by virtue of this regulation.