I have a client (a sole trader) whom I write up ledgers for quarterly. I also prepare a note of all the figures for his VAT return. He then goes ahead and submits the return himself online.
It turns out that in the last quarter he underdeclared his VAT liability by slightly over £5500 when submitting the return online.
I have only picked up on this three months later when asked to prepare the following quarter's figures.
Has anyone any experience in situations like this?
Should I aproach him first and clarify if it was an oversight (which I doubt)?Do I go ahead and disclose to the relevant authorities? Does anyone have the relevant contacts in HMRC to contact?? Should I warn the client of my intent? Will my client be notified of my disclosure etc? etc etc
I would ask the client in the first place to see if he has an explanation for the underdeclaration and let him know that he should have declared it. There may be a good reason. Did you provide him with the figures and then when he submitted it online he deliberately put in lower figures? If this is the case then you should stress that he cannot do this and mention words such as "fraud" and "large fine"...should set him straight. You can tell him in writing to cover your own back.
If it's a genuine mistake then you can correct errors in VAT returns in the next or subsequent VAT Returns (subject to an error limit of £10,000 and a time limit I think). If the error(s) amount to more then this then you have to make a separate declaration to HMRC.
Take a look at the following link which should help you.
I think it was a genuine attempt to underdeclare. I provided him with the figures for the usual boxes one to eight for the return and he purposely put in lower ones for sales and VAT on sales.
I think I will ask him in writing for an explanation in writing to keep myself covered. I anticipate though that he will come back saying he's not in a financial position to declare the full amount.
Who then do I contact and what can I expect then to follow?
The sole trader client is a solicitor by the way!
No, I have my email to him telling him what the correct figures all were. He then took those figures, changed them and filed the return himself online.
I never filed any returns or had access to file them.