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HMRC have confirmed details of their new practice regarding voluntary disclosure of errors on VAT returns from 1 September 2008.

The current practice, described in paragraph 2.4 of Notice 700/43 (Default Interest) and note 4 on form VAT 652, of not charging default interest on net errors of £2,000 or less separately notified to HMRC, will continue until the end of August 2008. However, following the decision in Wilkinson v Commissioners of Inland Revenue, this practice is not considered lawful and will be withdrawn with effect from 1 September 2008.

This means therefore, that all error notifications (previously known as voluntary disclosures) requiring an assessment may be subject to a default interest charge, irrespective of the amount involved. However as before, de minimis net errors can continue to be corrected on a VAT return and will not attract interest.

Link

HMRC Brief 38/08