VAT CORRECTIONS: Contact the VAT Error Correction Helpline if you want to report an error or inaccuracy to their team.
VAT Adjustments HMRC
You should always adjust your most current Value Added Tax account.
You can, and should, correct any VAT errors on a past return.
But, you can only do this if the errors are not deliberate and below the VAT reporting threshold.
As a rule, you should make all Value Added Tax corrections within 4 years of your last accounting period.
You must report other VAT errors and corrections outside these conditions to HM Revenue and Customs.
VAT Error Reporting Threshold
The net value of the VAT error reporting threshold is £10,000. That means you can make an adjustment to your next return if your net value is below this error threshold.
You should also make the VAT adjustments any time your error amount is up to 1% of your box 6 figure. But, the maximum correction threshold for this modification is £50,000.
Note: You must report all errors above the reporting threshold to HM Revenue and Customs (see below).
VAT Calculate Net from Gross Amount
Use this formula to calculate the VAT net value of any errors:
- Work out and sum up the additional tax value due to HMRC.
- Then subtract the tax amount that you are due.
Note: Report deliberate or careless VAT errors to HM Revenue and Customs in writing and separate from this calculation.
Making a VAT Adjustment
Make your VAT adjustments when you submit your next return. Insert the net value of tax due to HM Revenue and Customs into box number 1. Add the figure of tax due to you into box number 4. Following the adjustment you must also:
- Keep records and details about any inaccuracies and the amount of VAT involved.
- Keep details which include the date of discovery and how the error happened.
- Include the inaccuracy value in your standard VAT account.
The VAT Error Correction Team can help you make corrections. But, HMRC can issue penalties and charge interest for errors caused by dishonest or careless behaviour.
VAT Error Correction Team
Telephone: 0300 200 3700
Monday to Friday: 8am to 6pm
UK phone call rates.
VAT Errors & Inaccuracies You Must Disclose (report)
There are some inaccuracies which cannot be adjusted or corrected on your VAT Return. That means you must report or disclose these types of inaccuracies:
- Any error which goes above the VAT reporting threshold.
- An error made on purpose (e.g. a mistake made deliberately).
- Errors made in your accounting period ending more than four years ago.
Reporting to HMRC: VAT Error Correction Form
Fill in the details on the VAT652 error correction form and mail it to the VAT Error Correction Team. They also accept a normal letter from you if it includes the same information asked on form VAT652. You should get a reply within 21 days.
HM Revenue and Customs
VAT Error Correction Team – SO864
Newcastle
NE98 1ZZ
United Kingdom
HMRC will inform you whether the amount you calculated is correct. They will also tell you if any interest or tax is owing. A statement provided by HM Revenue and Customs will then show your current Value Added Tax balance.