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 January 2019

You can adjust your current VAT account to correct errors on past returns if they’re:

  • below the 'reporting threshold'
  • not deliberate; and
  • for an accounting period that ended less than 4 years ago

The reporting thresholds that apply are:

  • the net value of the errors is £10,000 or less; or
  • your error amount is less than 1% of your box 6 figure (up to a maximum of £50,000).

If you do not meet these criteria, you will need to separately disclose these inaccuracies to HMRC using form VAT652. HMRC will then send you a notice telling you if the amount you calculated is correct and any interest or VAT you owe. 

Regardless which route you make the correction, you must keep details about the error - for example the date it was discovered, how it happened, the amount of VAT involved - and make an adjustment for them in your VAT account (usually part of your bookkeeping system or year end accounts). 

Your local TaxAssist Accountant would be happy to look after your VAT affairs. Please contact us for more information and to find your closest office. 

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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