Correcting VAT errors

I complete the VAT returns for my small business and noticed recently that I had made some errors in previous returns. Can you advise how I correct these, and will there be any penalties or interest to pay on this?

1st May 2009

Up until 31 March 2009 you could not correct errors in VAT accounting periods that end more than three years ago. The limit was increased to four years from 1 April 2009. There are two methods available for amending a VAT return if you discover an error.

If the net errors total less than 10,000, or up to 50,000, provided the error does not exceed 1 percent of the net sales on the VAT return containing the error, then you can incorporate the adjustment into the next return.

The other way to disclose the errors is to contact your local VAT Business Advice Centre by completing VAT form 652 . If you use this method, you must not make adjustment for the same errors on a later VAT return.

Be aware that HM Revenue & Customs may also charge interest on any under declarations you disclose in this way by issuing a Notice of Assessment (VAT 655) if they find you have underdeclared VAT.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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