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Budget changes proves helpful for VAT refunds

A minor change to the VAT regime which has emerged from the Budget 2008 documents is helpful to taxpayers claiming a refund.

The Treasury has increased the threshold below which VAT errors can be adjusted on the VAT form without consulting HMRC.

The change takes effect on 1 July 2008.

An adjustment which is less than either £10,000 or 1% of the quarterly turnover (subject to a maximum of £50,000) can now be adjusted on a VAT return.

If an adjustment is greater than that, taxpayers will still need to complete a separate written notification to HMRC on a VAT 652.

The tax authority is confident that this will reduce such notifications by 70%.

That is the good news.

If the adjustment is calculated wrongly then a penalty can be issued.

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