It is very simple to make a mistake in your VAT return. It's possible that you overlooked something by accident or miscalculated some of the numbers. Be that as it may, if this should occur and you find that you have made an error in a return that you have already filed, there is no need for you to freak out because it is simple to rectify the situation. You do not need to inform HMRC about the errors as long as certain requirements are met; rather, you can easily remedy them by revising your subsequent VAT return to reflect the changes.
Adjustment conditions
You are able to make corrections to errors on previous VAT returns by adjusting your current VAT return, provided that the inaccuracies:
fall below the threshold for reporting; they were not made on purpose; and they pertain to an accounting period that ended no more than four years ago.
criterion for reporting
The threshold for reporting inaccuracies that pertain to net amounts is set at £10,000. Adjustments to the following VAT return can be made to remedy net errors as long as the amount is less than or equal to £10,000 and the other adjustment conditions are met. Errors of more than £10,000 (up to a maximum of £50,000) are also eligible for correction through the subsequent VAT return, provided that the error does not exceed 1% of the box 6 figure (total value of sales and all other outputs excluding any VAT).
Errors that are greater than the reporting level are required to be communicated to HMRC. They are not able to be fixed by revising the following tax return.
Making the necessary changes
The modification can easily be made; all that is required of you is to:
If there is a tax debt owed to HMRC, add the net value; or
When calculating the tax that is owed to you, include the net value.
In addition to this, you are obligated to keep track of the specifics of the error, including the time and date it transpired. It is also necessary for you to fix your own VAT.
Example
Richard works in the landscaping and gardening industry. He has his VAT registration and submits returns on a quarterly basis. He finds out in December 2017 when compiling his year-end accounts that he has recorded a purchase invoice for $2,400 plus VAT twice, once in January 2017 and once in February 2017. The first time it was recorded was in January 2017. As a direct consequence of this, he erroneously claimed a total of £480 in VAT for the quarter that ended on February 28, 2017. His subsequent VAT filing is the quarter that ends on February 28, 2018, when the issue is detected. Since he did not intend to make the mistake, it occurred within the past four years, and it does not exceed the level for mandatory reporting, therefore he is eligible to have it corrected in this return. Before making any adjustments for the inaccuracy, the figure in box 1 for the period (the amount of VAT that was due for the period on sales and other outputs) was £5,360. In order for him to make up for the sum that was mistakenly claimed in the earlier return, he needs to increase the value in box 1 by 480 pounds. Because of this, his revised box 1 total comes to £5,840 (£5,360 plus £480).
Reportable mistakes
The adjustment of the VAT return is not always capable of rectifying all inaccuracies. Errors that are deliberate, occur more than four years in the past, or are greater than the threshold for reporting are required to be reported to HMRC. Notifying the HMRC's VAT error rectification team can be done in a number of ways, including on form VAT652 or via letter (for contact information, see this page).
When the error was the product of careless or dishonest behaviour, interest or penalties may be levied against the account in question.
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