How can you deal with VAT return errors?

If you are running a business, handling VAT returns can be complex.

You may have submitted returns with errors previously if you were unsure of what to do and could be at risk of further investigation or fines from HM Revenue & Customs (HMRC).

But do not worry, these errors can be corrected as long as they meet certain criteria.

Any errors for the previous four years in VAT returns can be corrected if the value of the errors are:

  • £10,000 or less
  • Between £10,000 and £50,000 but make up less than one per cent of the total of your sales.

If your errors come under the above criteria, then you can make a correction in your next VAT return.

You will need to inform HMRC and have a separate discussion to amend them if your errors are:

  • Over £50,000
  • Over £10,000 and exceed 1 per cent of your sales
  • Purposeful errors.

Value of your error

You can calculate the value of errors you have made by adding up the extra tax that you owe to HMRC and then subtracting the tax you are due back.

Any deliberate errors need to be discussed with HMRC separately, so cannot be included in this.

When you submit your next VAT return, you should add the tax you owe HMRC to box one and the tax you are owed to box four.

Alternatively, you can inform HMRC of errors by filling in the online form or form VAT652.

If you need advice on VAT returns, identifying and checking for errors or other aspects of tax returns, contact us today for advice.