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Correcting VAT Errors

by Thomas Nock Martin | Nov 20, 2021 | Tax

VAT Errors Correction - TNMCA

Summary. VAT errors, whether from missing receipts, incorrect calculations, or wrong rates, require timely correction to avoid potential HMRC penalties. Errors under £10,000 can be adjusted in the next VAT return, while larger errors may need direct reporting to HMRC. For assistance with VAT errors correction and compliance, consult experienced chartered accountants.


When it comes to your small business accounting, if you’re taking charge of all the paperwork yourself, it’s not unusual for errors to take place. You might not have even been solely responsible for your VAT error; it could have been off the back of an incorrect invoice. But, no matter what the cause of the VAT errors are, the correction is down to you as the business owner.

Reporting and correcting VAT errors is usually a simple process. But, you may be unsure of how to correct a mistake, or if the level of error is serious. Therefore, it’s important you consider getting advice from experienced chartered accountants for small businesses, so you can ensure you’re on the right track.

When Is My VAT Return Due?

VAT-registered businesses must submit their VAT returns every three months. Your online account will show you when they are due, and when the payment has to clear HMRC’s account. Deadlines for submitting VAT returns are 1 calendar month and 7 days after you have reached the end of the quarterly accounting period.

Identifying The VAT Errors 

There most common VAT errors that can be submitted are:

  • Missing a receipt or a payment off the return
  • Charging a customer the wrong VAT rate
  • Getting your calculations wrong

If you have realised that after submitting your return that there is a mistake, it’s important to act quickly to put it right.

When you submit the return, the figures for the amount of VAT you collected and paid should be accurate. In addition, based on the correct rate of VAT. If HMRC spots an error, you could end up with a high penalty. So, it pays to act fast and address errors there and then.


Errors Within The Threshold 

If the total value of your errors falls under £10,000, adjustments can be made on your next VAT return to account for the errors. You may not even necessarily have to report the error to HMRC. Alongside being under this threshold, the error must also:

  • Not have been deliberate
  • Relate to an accounting period that has ended within the last four years

Errors Out Of The Threshold 

If the value of the error is between £10,000 and £50,000, an adjustment on your next VAT return can still be made. However, the total value of the error must be 1% or less of the total value of your sales and outputs which are reflected in box 6 of the next VAT return:

If the value of this error is more than 1% of this total. Or it exceeds £50,000, the error must be reported to HMRC.

If the value of the error is above those thresholds, you must report the error to HMRC.

Small Business VAT Returns 

Are you a small business that has made VAT errors that is in need of correction? Or do you simply want to avoid errors being made? Then why not enlist the help of a chartered accountant to support you with your VAT returns? Whether it’s adjusting the returns after an error, or completing them first time round, our experienced chartered accountants in Brierley Hill can keep your business compliant and make VAT returns as simple and as hassle-free as possible.

Get in touch today for more information on our small business VAT support. Or call  01384 261300 to speak to a member of our helpful and friendly team.

If you have found this blog helpful, you may wish to read our previous blog: HMRC VAT Enquiries Explained