Revenue & Customs Brief 38/08

VAT: Default Interest and net errors of less than £2000

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 £2000 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the decision in Wilkinson v Commissioners of Inland Revenue, this practice is not considered lawful and will be withdrawn with effect from 1 September 2008.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.

Issued 1 August 2008