Inform HMRC about errors in your VAT return
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In August this year, the UK tax authority released a new online form designed to help taxpayers correct errors in already submitted VAT returns. This is HMRC's preferred method, as it saves officials a lot of time – so everyone is encouraged to use it instead of the traditional paper VAT 652 form.
Why is it better to use the digital form for correcting VAT returns?
The advantages of the digital form include real-time VAT number validation and flagging of late corrections. Additionally, new features have been introduced:
- the ability to upload supporting documents (e.g., invoices) to the form;
- the appearance of prompts that help prevent duplicate corrections or payments through verification checks;
- the option to save a partially completed form and return to it later.
A detailed guide on how to use the form is not yet available, but HMRC has announced its imminent publication.
What errors can you correct in your next VAT return?
You can correct errors in returns from the previous 4 years in your next return, provided the net value of the errors is:
- £10,000 or less;
- between £10,000 and £50,000, but less than 1% of your total sales value.
When submitting your next return, add the net value to box 1 for tax owed to HMRC, or to box 4 for tax owed to you.
What errors must you correct using form VAT652?
Errors with a net value of the following require a separate correction on form VAT652:
- above £50,000;
- above £10,000 if they exceed 1% of your total sales value;
You must also correct deliberate errors separately.
How is the net value of errors in a VAT return calculated?
You should sum the additional tax payable to HMRC and subtract any tax owed to you from this amount. However, deliberate errors cannot be included in this calculation – these must be reported separately. Remember that you must enter details about the error (for example, the date it was discovered, how it occurred, and the VAT amount it relates to) and account for the error's value in your VAT account.
The new digital VAT652 form for making VAT corrections is available at this link.
You can read more about how to correct VAT errors, make adjustments, or submit claims here.
However, if you need further assistance, you can use this link, to contact the VAT General Enquiries Team.
