Correcting errors in your VAT return

It’s common to make mistakes on a VAT return, but they must be corrected.

Four-year window
You can correct errors in your next VAT return if they were made in the preceding four years and are:

·        Less than £10,000, or

·        Between £10,000 and £50,000 but less than 1% of your total sales value.

Errors over £50,000, or over £10,000 and greater than 1% of your total sales value, must be reported to HMRC separately, as must deliberate errors. This can be done using form VAT652 or online (see www.gov.uk/guidance/check-if-you-need-to-report-errors-in-your-vat-return).

The net value of the error is the additional tax due to HMRC minus any tax owed to you by HMRC.

Adjusting your next VAT return
If the error qualifies for correction in your next return:

·        If you owe VAT to HMRC, add the error to the box 1 figure.

·        If HMRC owe you VAT, add the error to the box 4 figure.

Keep details of the error (how it arose, discovery date, and VAT amount) and correct your VAT account.

Interest and penalties
If VAT is due to HMRC, interest is charged from the due date until payment. Payments more than 15 days late incur late payment penalties.
If the error results in a VAT repayment, repayment interest may be paid.