There are two methods for correcting errors that have been made on previously submitted VAT returns:
- Adjust the errors on the next return where either the net error value was £10,000 or less, or the net value was less than 1% of the Box 6 figure, up to £50,000.
- Notify HMRC separately of the error. This method must always be used if the net errors exceed £50,000, or the net value exceeds £10,000 and is more than 1% of the Box 6 figure. Further, all errors on previous returns made deliberately must also be disclosed separately.
Updated guidance issued by HMRC makes it clear that, except for errors made where you took reasonable care, all other errors, regardless of size, must be disclosed separately to HMRC. This means that any other errors must be separately disclosed to HMRC.
Failing to separately disclose them will mean that you will not be able to gain the maximum reduction of the penalty to 0% for unprompted disclosure.
Further, HMRC has announced that it no longer permits VAT return errors to be corrected using form VAT652. These must now be corrected either online or in writing, stating how and when the error arose, whether it was an input or output error, the adjustment needed and how it was calculated.
Careless means failure to take reasonable care, such as ignoring advice, relying on outdated guidance or not seeking clarification.
Deliberate means knowingly submitting incorrect information.
https://www.gov.uk/guidance/how-to-correct-vat-errors-and-make-adjustments-or-claims-vat-notice-70045
https://www.gov.uk/guidance/check-if-you-need-to-report-errors-in-your-vat-return#full-publication-update-history
