How to amend a VAT return

We’re all human and we all make mistakes. While we do all we can to help you with your accounts at KashFlow, we know that sometimes errors can be made when making your records. The important thing is not to panic but to try to put it right.

You can easily do a VAT return with our bookkeeping software and this post looks at whether or how to amend a VAT return and how to react to errors, so that you know how to handle corrections to your tax affairs. Hopefully, this could help you to avoid paying a big financial penalty.

Making a VAT correction

You can correct an error if the adjustment that you need to make is below £10,000.

When you submit your next return, make your VAT correction by adding the ‘net value’ to box 1 for any tax due to HMRC. If you are owed tax, place the figure in box 4.

It’s important that you keep a record of any amends you have made to your VAT records – and you should voluntarily notify HMRC of an error.

In your letter – and your records – keep a note of:

• When you discovered the error
• Why the error was made
• The amount of VAT involved
• The period in which you need to make a VAT correction

You can contact the VAT Error Correction Team if you are unsure and want some assistance.

You need to be aware that HMRC might choose to issue you with a penalty if it feels that you have acted carelessly or dishonestly. The penalty can range from:

• up to 30 per cent if you have been careless
• up to 70% where it is a deliberate error
• up to 100% if it was is both deliberate and concealed.

Bigger VAT corrections

There are three circumstances in which you must disclose the details to HMRC. These are if the error:

• amounts to more than £10,000
• was deliberate
• relates to an accounting period that ended more than four years ago

In these instances, you must fill in form VAT652 (or put the information it asks for into a letter) and send it to:

HM Revenue and Customs

VAT Error Correction Team – SO864

Newcastle

NE98 1ZZ

United Kingdom

You should then get a reply from HMRC to tell you if your calculations are accurate and what you owe. If you do not receive this within 21 days you should contact them yourself by calling 0300 200 3700.

Keep a record of any errors you make on your VAT return and follow the above process as soon as you discover them to avoid the issue escalating.