While submitting your VAT returns, mistakes can occur. Whether it’s missing an important entry or adding a wrong figure. And there are circumstances where mistakes are sometimes unavoidable. So, if you find that you have made a mistake after submitting your VAT returns, don’t panic there is a solution. You just need to put things right or report them to HMRC, otherwise, you might have to pay a large penalty for a small mistake. For this reason, read this post till the end to find out the process of correcting VAT errors.
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Correcting VAT Errors
There are two ways to correct VAT returns. First, you can correct the mistakes manually. And you can report those errors to HMRC. Let’s have a look at both processes.
How to Correct Errors Manually?
In some cases, you can do manual corrections to your VAT return by adjusting the future VAT return with the previous one. You can do this if your error falls under one of these circumstances:
- You made an error in a return for a financial period that ended less than 4 years ago
- If your VAT had a net value (VAT that you overpaid minus the VAT you underpaid) if it is below the HMRC reporting threshold of £10,000
- You made an error mistakenly (it was not deliberate)
- The error’s net value is from £10,000 to £50,000 (it can be rectified on the next VAT return if that it is not above 1% of the box 6 figure. You can calculate your net error by subtracting the VAT that you overpaid from the VAT you underpaid.
If there’s an error or mistakes as discussed above, you can make adjustments. If not, you need to report it to HMRC.
How to Make Adjustments?
Making adjustments is a straightforward process. You can either:
- add the net value to box 4 (tax due on your business) or
- add the net value to box 1 (tax owned to HMRC)
If the errors on your VAT return don’t fall within the above criteria, you must turn to HMRC to report them. Please don’t forget to keep details of the error’s nature and the date when it took place. If you’re not sure whether the error on your VAT returns meets the above criteria or not, you can contact an accountant for help.
Cheap accountants in London offer tailored accounting and VAT services for you – all at reasonable rates. Contact us today!
Reporting an Error to HMRC
As discussed you are required to report the error to HMRC if your error doesn’t fall under the above criteria. First, you need to complete the form VAT652 and post it to HMRC. You can download it or you can contact HMRC on 0300 200 3700 and request them to provide the form VAT652 for reporting the error.
If you’re unable to get access to the VAT652 form, you can get in touch with HMRC directly through the post at:
HMRC, VAT Error Correction Team – SO864, Newcastle, NE98 1ZZ, UK
After contacting HMRC, they’ll ask you to provide some information about the error. They’d be asking about:
- the details of how the VAT error occurs
- Whether it was input tax or output tax error
- how you worked out the error amount
- the total amount of VAT that requires adjustment
- VAT amount that is underpaid or overpaid by your business in each VAT period
- Any of the mistakes reporting resulted in your business paying HMRC an amount that wasn’t due
VAT Notice 700/45 by HMRC will provide you with an in-depth guide on correcting VAT errors but it is better to talk to an accountant if are unable to correct your mistakes on VAT returns.
How Cheap Accountants in London Can Help?
Correcting VAT errors on returns that are already submitted can be complex for the one who’s new to it. If you have made an error – whether it’s a small or a big one – Cheap accountants in London will correct them manually and we will also report this error to HMRC on your behalf to keep you safe from heavy penalties. In addition, we’ll make sure that everything is accurately adjusted within the minimum time frame.
Our VAT accountants will also help you to prevent future errors on your VAT returns.
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Disclaimer: This blog provides basic information on correcting VAT returns.