Interesting Facts

VAT Self-correction — Time limits

Clarification of the currently published guidelines in relation to time limits for self-correction of VAT errors.The current Code of Practice for Revenue Auditors provides for a self-correction facility in regard to VAT and other taxes. This facility allows a taxpayer to correct returns without penalty, but requires the payment of interest and notification to the Revenue.

The self-correction facility is subject to certain time limits. In the case of VAT, it must take place before the due date for filing the income tax or corporation tax return for the chargeable period within which the relevant VAT period ends.

Furthermore, the Code provides that if the net underpayment for the 2-month period being corrected is less than €5,000, the correction can be made without interest and without notification to the Revenue.

It was the view of some practitioners that the general time limit detailed above also applied to this category of correction and there have also been cases of it being applied by Revenue Inspectors. The Revenue has, however, recently confirmed that the general time limit does not apply to this category of self-correction.

It is important to note that the self-correction facility cannot be used after the Revenue has notified the taxpayer of an audit.

Comment
Have you made an unprompted disclosure to the Revenue of VAT liabilities of less than €5,000 per period and suffered interest or penalties by virtue of the error being discovered after the due date for submission of the corporation tax returns for the year in question? If so, you should consider submitting a claim for repayment of any interest and penalties paid.