How to correct errors on your VAT returns

If you realise that you’ve made a mistake on your VAT return, don’t panic! There are ways to correct the errors, and as long as you follow the correct process you should be able to clear the matter up quickly. 

Read on for more information on how to fix and errors on your VAT returns… 

What errors can be corrected? 

If you find an error in your VAT return they must be corrected. 

You can make adjustments to errors on your VAT return that are: 

  • Below the reporting threshold (£10,000 or less) 
  • Not deliberate mistakes 
  • For an accounting period that ended less than 4 years ago 

Any errors that do not meet the above conditions must be reported directly to HMRC. 

How to work out the net value of any errors 

To work out the net value of the errors take the following steps: 

  • Add up the additional tax that is due to HMRC 
  • Subtract the tax you are due 

You must report any deliberate errors separately – you cannot include them in this calculation. 

How to make an adjustment 

You can correct any errors when you submit your next VAT return. 

When submitting your next return, add the net value to box 1 for any tax due to HMRC, or to box 4 for any tax due to you. 

Alternatively, you can email form VAT652 to the VAT Error Correction Team. 

You must: 

  • keep details about the inaccuracy – e.g. the date it was discovered, how it happened, the amount of VAT involved 
  • include the value of the inaccuracy in your VAT account 

Are there fines for making mistakes on your VAT return? 

Be warned that HMRC may charge you penalties and/or interest if the error is due to careless or dishonest behaviour. 

As soon as you find an error, you should record it in your VAT records for correction or you could be liable to a penalty. 

If you discover a non-careless error, and do not take steps to correct it, the inaccuracy will be treated as careless and a penalty will be due. 

You should tell HMRC about any careless errors in writing, regardless of their value, as well as adjusting your current VAT Return – this may lead to a reduction in the penalty. 

If you need any further advice and assistance on VAT returns, please feel free to get in touch with us here at Magpie Accountancy. 

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