How to Correct Errors in Your VAT Return

Mistakes can happen when filing your VAT return — it’s more common than you think. The good news is that HMRC allows you to correct most errors, but the way you do it depends on the size and nature of the mistake. Here’s a breakdown of how to fix VAT return errors and stay compliant.

The Four-Year Correction Window

If you’ve made a mistake, you have up to four years to correct it.

You can adjust the error in your next VAT return if:

• It’s under £10,000, or

• It’s between £10,000 and £50,000, but also less than 1% of your total sales value.

Larger errors — over £50,000, or over £10,000 and more than 1% of your sales value — must be reported separately to HMRC using form VAT652 or via their online service. The same applies if the error was deliberate.

💡 HMRC has an online tool to help you check the right reporting method.

How to Adjust Your Next VAT Return

If your error falls within the correction limits:

• If you owe VAT to HMRC: Add the error amount to Box 1 of your next return.

• If HMRC owes you VAT: Add the error amount to Box 4 instead.

Always keep detailed records of:

• How the error happened,

• When you found it, and

• The exact VAT amount involved.

You must also update your VAT account to reflect the correction.

Interest and Penalties to Watch Out For

If the error means you owe VAT, HMRC may charge:

• Interest — from the due date until payment is made.

• Late payment penalties — if payment is more than 15 days late.

On the other hand, if the mistake means HMRC owes you VAT, you may receive repayment interest.

Key Takeaway

Correcting VAT return errors is straightforward if you act quickly and follow HMRC’s rules. Smaller mistakes can be fixed in your next return, while larger or deliberate ones must be reported separately. Always keep thorough records to protect yourself in case of an HMRC review.

Partner note: VAT Notice 700/45, How to correct VAT errors and make adjustments or claims.

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