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Error not exceeding £50,000

Regulations¹ made under VATA 1994, Sch 11, para 2(10)(b) provide that a taxable person may correct his VAT account² if, in relation to all understatements or overstatements of input tax or output tax discovered by the taxpayer during a prescribed accounting period, the difference between underdeclarations of liability³ and overdeclarations of liability⁴ does not exceed £50,000. This is subject to the proviso that if the Box 6⁵ figure of the VAT return is less than £5,000,000, the difference must not exceed 1% of that figure unless the difference is £10,000 or less⁶. It is also subject to the proviso that the 'error' must not be deliberate; if it is deliberate, the procedure described under 'Error exceeding £50,000' below must be followed⁷.

If the amount of any understated input tax exceeds the amount of any overstated input tax, the amount of the excess is entered as a positive amount in the tax allowable portion of the person's VAT account⁸. If the amount