Ask the accountant: What if I make a mistake on my VAT return?

A. Honest mistakes in your VAT returns are bound to happen, even HMRC acknowledges this. Making a mistake is easy, putting it right can often be quite the opposite. If your correction requires you to issue an amended invoice or credit note to a client, as long as your bookkeeping is carried out correctly, the VAT adjustment in the corresponding return will be taken care of without further action. If the correction doesn’t involve issuing a revised invoice or credit note - for example, where you’ve reclaimed too much or too little VAT for a purchase - you’ll need to make a manual adjustment to your bookkeeping records.

No further action will be required as long as the adjustments are within the same VAT return period or, if not, their total value doesn’t exceed the limits allowed by HMRC.

Where the total value of the errors exceeds £10,000 - or if greater, 1 per cent of the turnover figure shown in Box 6 of the return in which the correction is made (up to a maximum of £50,000) - you must send a separate report (voluntary disclosure) to HMRC. Even if the corrections don’t require a voluntary disclosure, it is sometimes advisable to make one anyway as this will give you extra protection from penalties. Take care with VAT corrections which fall in a later financial year than the original transactions as you may need to make an adjustment to the annual accounts in which the error arose. Sometimes it’s best to seek expert advice.