In a Nutshell – What to do if you’ve made an error on a VAT return.

Date: 17/12/18

In a Nutshell – What to do if you’ve made an error on a VAT return.

None of us are infallible and mistakes happen, but what are the consequences of making an error on a VAT return?

Image the scenario, a VAT inspection is due, and you’ve just realised that there is a genuine mistake on a VAT return submitted months or even years ago. What should you do?

 If the error was made more than four years ago, you don’t actually have to do anything.

 If the error was made within the last four years, then there are set procedures to follow.

 In simple terms, if the net value of the VAT errors is less than £10,000, the error can be corrected on your next VAT return.  If the net value of the VAT errors is greater than £10,000 then HMRC must be informed by completing Form VAT652.

 If the mistake is down to human error than HMRC will not charge a penalty, however they may argue that it is down to carelessness in which case the penalty could be up to 30%. Those who fully disclose an error (without being prompted by HMRC), and give a reasonable explanation of how it occurred, are likely to have any penalty reduced to £nil.

 For help and advice on this or any other issues, please get in touch with our Lancaster office. A member of our senior team will be happy to arrange an informal meeting to discuss ways in which we can support you and your business.


Alan Taylor FCCA

Author: Alan Taylor FCCA

A former pupil at Ripley St Thomas C of E High School, Lancaster, Alan joined Scott & Wilkinson direct from school in 1994 and qualified as an Accountant in 2001. As practice manager, Alan is responsible for the day-to-day...

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