Correcting VAT Errors: A Guide for Businesses

Getting to Grips with VAT Errors: Why Correction Matters

It is surprisingly common for businesses to make VAT errors when completing their VAT returns — whether by mis-entering figures, omitting transactions, or misunderstanding the rules.

But once those VAT errors are discovered, it is crucial to correct them as soon as possible to avoid interest, penalties, or HMRC complications.

In this post, we’ll explain how to fix VAT errors, when you can correct them, and how Trueman Brown can support you in doing so.

The Four-Year Window for Correcting VAT Errors

Under HMRC rules, there is a “correction window” covering the preceding four years. If your VAT errors fall within certain thresholds, you may be able to correct them in your next VAT return:

  • Errors under £10,000 in net tax

  • Or errors between £10,000 and £50,000, provided they amount to less than 1 % of your total sales value

If your VAT errors exceed those limits, or were deliberate, you must notify HMRC separately.

That is usually done using VAT652 (or online) rather than just amending the next return.

When you evaluate net value, you take the additional tax you owe to HMRC less any credit due back to you.

How to Adjust for VAT Errors in Your Next Return

If your VAT errors are small enough to be corrected in the next return, here’s how you handle them:

  • If, as a result of the error, you owe VAT to HMRC, add the error amount to Box 1 of your return.

  • If, instead, HMRC owes you a repayment, add the error to Box 4.

  • In all cases, retain full documentation: how the VAT error arose, when it was identified, and how much VAT was involved.

  • You should also update your internal VAT account records to reflect the adjustment.

Interest and penalties

If the error results in VAT being due to HMRC, interest and penalties may be charged.

Where VAT is paid late, interest is charged from the date on which it was due to the date on which it was paid.

If the payment is made more than 15 days late, late payment penalties will also apply.

How Trueman Brown Can Help You Correct VAT Errors

Correcting VAT errors — especially larger or complex ones — can be stressful and time consuming. That’s where Trueman Brown Chartered Accountants step in:

  • We will review your VAT returns and records, identify any VAT errors (past or present), and assess how they should be corrected.

  • We advise whether a correction via the next return or a formal VAT652 notice (or HMRC disclosure) is required.

  • We help you prepare the corrected return, plus all supporting documentation and explanation of the VAT errors.

  • We liaise with HMRC on your behalf, managing queries, negotiations, or disclosures.

  • We can put in place better internal controls and review procedures to avoid similar VAT errors in future.

If you wish to discuss your VAT error situation with us, please contact Trueman Brown on 01708 397262 or by email at mark@truemanbrown.co.uk.

FAQ: Frequently Asked Questions on VAT Errors

Q1: What qualifies as a “VAT error”?
A VAT error is any mistake in your VAT return or accounting that causes your VAT liability to be misstated — for example, omitting a sale, using the wrong rate, or incorrectly claiming input tax.

Q2: How many years back can I correct VAT errors?
You can correct VAT errors in your next return going back up to four years, if they fall within permitted thresholds. For larger or deliberate errors, you must notify HMRC separately.

Q3: What if my VAT errors are above £50,000 or over 1 % of sales?
In those cases you can’t fix them in the next return. You must file a disclosure (VAT652 or online equivalent) to HMRC with full details of the errors.

Q4: Will I be penalised for making a VAT error?
If the error increases your VAT liability, interest and penalties may apply — particularly if payment is late (over 15 days) or if HMRC deems the error deliberate or careless.

Q5: Can you help me if I discover VAT errors from many years ago?
Yes — even if a mistake is several years old, we can review your records, advise whether disclosure is necessary, and help you in any engagement with HMRC.

If you have any further questions or want assistance correcting VAT errors, contact Trueman Brown at 01708 397262 or mark@truemanbrown.co.uk — we’re here to help you restore confidence in your VAT compliance.

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