VAT Form VAT652 withdrawn

HMRC has confirmed that companies can no longer correct errors in their VAT returns using form VAT652, instead they must be made online or in writing.

In future, HMRC must be informed about corrections to VAT returns within the four-year time limit by either:

Updating the next VAT return
Making the correction online
Sending the correction in writing

HMRC stressed that the ‘simplest and most commonly used’ way to correct an error is by making an adjustment or correction in the next due VAT return.

Before correcting errors in a VAT return it is important to calculate the net value of the error and total value of sales.

This can be done by adding the net value to box 1 for tax due to HMRC, or to box 4 for tax owed back to the company when submitting the next return.

‘Keep details about the error. For example, the date it was discovered, how it happened and the amount of VAT involved,’ HMRC stressed. ‘Include the value of the error in your VAT account.’

In the event of a deliberate error, or for those that do not want to make the adjustment on their next VAT return, they must either:

Make the correction online
Send the correction in writing — see section 4.5 HMRC VAT notice 700/45

HMRC can issue penalties for errors, ranging from 10% of the unpaid VAT upwards.

‘You’ll face penalties for any errors in your return that are careless or deliberate. You will not need to pay a penalty if you make an error despite taking reasonable care,’ HMRC stressed.

‘An error is careless if you fail to take the care and attention that could be expected from a reasonable person in the circumstances.

‘If you discover an error after making a return that was neither careless or deliberate when you sent it to HMRC, you must take steps to correct it. If you do not, we’ll treat the error as careless.’

The time limit for error corrections is four years from the end of the prescribed accounting period in which the error occurred for under-declared and over-declared output tax and over-claimed input tax, and due date of the return for the prescribed accounting period in which the error occurred for under claimed input tax.

There are two exceptions:

Time of supply (tax point errors) where taxpayer has declared an amount of VAT on the return that immediately precedes or follows the return for which the amount was due, provided the later return is within the four-year time limit; and
The four-year time limit does not apply to deliberate errors

Notifications in writing must include the VAT registration number.

Send them to the VAT Error Correction Team by post at: BT VAT, HMRC BX9 1WR.
Tel: 0300 200 3700
Email: [email protected]

MRC guidance: How to correct VAT errors and make adjustments or claims

If you have any further questions, please get in touch with us.