Amendments of material errors in VAT returns
2007-05-22

Adjustments of material errors in VAT returns

At the date of entering into force of the present order, the Order no. 520/2005 issued by the Minister of Public Finances for the approval of the Instructions for the adjustments of material errors in VAT returns, with its subsequent modifications and completions is abrogated.

According to the new instructions, by way of exception from the provision according to which rectification of the VAT return is not possible to be made for the fiscal periods that have not been subjected to fiscal controls or that are still subject to fiscal controls, the adjustments of material errors in VAT returns can be realized based on the disposition on adjustment measures communicated by the fiscal inspection authority. In this case, the request for adjustments of material errors in VAT returns, submitted by the taxable person, shall be accompanied by the disposition on adjustment measures, in original and in copy.

The remaining of the provisions related to the adjustments of material errors in VAT returns are similar to the ones stipulated under the former normative act. Consequently, within the prescription period of 5 years running from the January 1^st of the year following the year when the VAT return incorrectly drafted was submitted, the types of material errors subject to amendments are as follows:

• transcription errors, such as: amounts that have been incorrectly taken over from the accounting sales and purchases journals; reversal of some figures from the amounts recorded on the VAT return; incorrect taking over of some data from the VAT return corresponding to the previous fiscal period (for example: incorrect report of the payables account under the VAT return corresponding to the previous fiscal period);

• record under the VAT return of the VAT differences to be paid determined by the fiscal authorities that are not made in compliance with the legal requirements in the accounting field;

• errors resulting from the subscription under the VAT return of the amount of VAT requested to be reimbursed from the previous period.

Material errors found in the VAT returns can be adjusted only by the competent tax office, on its own or the taxpayer's initiative.

If the competent tax office requests to adjust on its own material errors found in VAT returns, this operation can be effected as follows:

• if it can be found the type of material error in the previously submitted VAT return (respectively if it is a computation error or it is due to incorrect taking over of the amounts recorded in the VAT return corresponding to the previous fiscal period or from VAT ledgers), the adjustment can be made on its own by its specialized department;

• if in the VAT return are to be found errors whose nature are unknown, the taxable entity shall be notified in writing by the specialized department of the fiscal authority and shall be requested to submit justifying documents, meant to offer any additional information and explanations necessary to be used when making adjustments to material errors found therein.

If material errors found in VAT returns are adjusted from the taxable person's initiative, this operation can be effected as follows:

• the taxable person shall submit the request for making the adjustments of material errors found in VAT returns to the registry desk of the fiscal authority or by mail, via certified mail;

• the taxable person shall be notified in writing by the specialized department of the fiscal authority the date, hour and submission place as well as the justifying documents that are necessary to account for the material errors.

The decision on the adjustment of a VAT return is structured according to the model of VAT return that was valid at the date to which refers the VAT return incorrectly drafted and the adjustments are to be effected under the rows subjected adjusted overstated or understated VAT differences as compared to the VAT amount previously stated. If after having adjusted the material errors found in the VAT returns it results a negative VAT amount, this recoverable balance VAT shall be carried forward to the VAT return related to the next fiscal period, to the return Adjustments section, under the "VAT due recorded under the VAT return related to the previous fiscal period still unpaid by the date of submission of VAT return". The legal payment term for the positive VAT difference is to be set forth, according to the legal regulations, based on the date when the decision on the adjustment of VAT is being communicated or notified, as the case may be.

It is to be considered material error failure to tick off the box corresponding to the VAT return by means of which is requested the reimbursement of the negative VAT balance from the previous fiscal period. The request for the adjustments of material errors is to be made by submitting a statement on one's own risk, certifying the acknowledgment of such situation, as well as the option expressed by the respective person's to amend such an error. This statements must be submitted by or before the date of submission of the VAT return corresponding to the next fiscal period, but not later than the legal term for the submission of such VAT return. In such situations, the negative VAT balance request should normally be solved within a 45-day term from the date of submission of such VAT recapitulative statement.