How to Correct VAT Errors?

If, after submitting your VAT return, you discover that you have made a mistake, make an effort not to freak out! You should be able to either personally amend the problem or report it to HMRC in order to get it fixed. This straightforward manual explains what actions to take in either of the two scenarios.

Making a manual correction to an error

You may be able to amend a subsequent VAT return in order to rectify an error that was made in a prior VAT return, provided that certain conditions are met. You have the option to do this if the mistake is:

  • was included in a return for a fiscal year that finished fewer than three years ago
  • It was not on purpose that your transaction had a net value (any VAT you overpaid minus any VAT you underpaid), which was lower than the HMRC reporting threshold of £10,000. (you should notify HMRC of any deliberate mistakes by following the instructions below)
  • had a net worth somewhere in the range of 10,000 to 50,000 pounds (but less than one percent of the sales you declared in box 6 on the VAT return for the period in which you discovered the inaccuracies). You can determine the total amount of your net error by taking the difference between the amount of VAT you overpaid and the amount of VAT you underpaid.
  • If the errors you committed fit the conditions listed above, you will be able to correct them on your next VAT return by adding the net value to either box 1 (tax owed to HMRC) or box 4 (tax due to your firm) of your VAT return. This will allow you to correct the errors.
  • In the event that the inaccuracies on your VAT return do not satisfy the requirements outlined above, you will be required to notify them to HMRC.
  • If you have any uncertainty regarding whether or not an inaccuracy on your return fulfils the aforementioned conditions, you should see an accountant.

Bringing an inaccuracy to the attention of HMRC

Fill complete form VAT652 and send it in to HMRC if you need to report an error on a VAT return to HMRC because it does not meet the conditions listed above. You have the option of either downloading the form from the website using the link provided above or calling HMRC at the number 0300 200 3700 and requesting that they mail you a copy of the form.

Even if it is possible to report an issue to HMRC without submitting form VAT652, doing so with the form should make the process far simpler. You can write to HMRC directly to report an error at the following address if you are unable to access a form:

H.M. Revenue and Customs Service

When you get in touch with HMRC, they'll ask for a few specifics regarding the error(s) you're reporting, so make sure you have the following information on hand before you do so:

  • the specifics of how each miscalculation in the VAT was made
  • the period of time for VAT accounting purposes during which the error or errors were made
  • if the error was related to either the input tax or the output tax
  • the amount of value-added tax (VAT) that your company under-declared or over-declared during each VAT period

what methodology did you use to arrive at this total?

  • whether or not any of the inaccuracies that were reported caused your company to lose money.
  • making a payment to HMRC that wasn't required to be made
  • the complete amount of the VAT that needs to be modified

The VAT Notice 700/45 published by HMRC gives extensive information regarding the correction of VAT errors; however, if you have any concerns about your VAT return, you should discuss the matter with your accountant.


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