VAT returns – correcting mistakes

There are special rules for correcting errors on VAT returns. The relevant rules depend on whether you need to:

  • Amend your VAT records if you discover they contain errors;
  • Correct errors on VAT returns you’ve already sent to HMRC;
  • Claim a refund if you’ve overpaid VAT, or not claimed enough credit on a return.

When you find you have made an error or errors in a VAT return that has already been submitted to HMRC, there are 2 methods that may be used depending on the size of the error.

An adjustment can be made on a current VAT return for a previous VAT return period if the net value of the errors does not exceed the greater of:

  • £10,000, or
  • 1% of the box 6 figure required on the VAT return for the period of discovery (subject to an upper limit of £50,000).

Where the net value of the error is between £10,000 and £50,000 and exceeds 1% of the box 6 figure or where the net value of errors found on previous returns is greater than £50,000 then a notification must me made using the VAT652 form. This form must also be used for any deliberate errors on previous returns.

Planning note:

Subject to the above, if an error is discovered before you’ve submitted a VAT return then you can amend your records, but you must ensure that you keep a clear note to show the reason for the error in case it is questioned in the future.

If you are uncertain how to deal with a past mistake on a return we can advise how best to deal with any necessary amendments or notifications.

Posted in Value Added Tax

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