Amended tax return

What it means

An amended return corrects a return already filed once it turns out the tax should have been different. It is always filed for that specific period, never patched in the current year.

It is due by the end of the month following discovery of the error, and the difference is payable in the same period. That keeps the penalty away and leaves only late payment interest.

It differs from a corrective return in timing: a corrective return replaces the original while the filing deadline is still running, an amended return is filed after it has passed. It need not raise the tax; it can lower it, for instance when a forgotten expense turns up, and then it results in an overpayment.

How it works in practice

The usual causes are an invoice arriving late, a wrongly claimed deduction, a misclassified asset or revenue booked in the wrong year. Where VAT is involved the control statement for the period is corrected too.

Self-correction carries a far lower sanction than discovery in an audit. That is the whole reason for filing as soon as the error is found rather than waiting to see if anyone notices.

When taking over the books from another accountant we also go through the most recent returns. If we find an error, we work out the effect year by year and agree with the client which periods to correct by amended return before the office starts examining them.

What to watch out for

Once a tax audit has started for the period, an amended return can no longer be filed. The sanction is then calculated at the highest rate and the chance to correct is gone.

Correcting one year often carries into the next: a change in depreciation, a tax loss or stock valuation shifts the tax base in later returns too. Correct only the year where the error arose and every following year is wrong as well, and an audit will reassess them one after another.