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Best Practices: How to Amend a VAT Return Quickly


3 minute read

VAT can be a complicated tax – especially for self-employed individuals and small business owners. We know that mistakes can happen; we’re all human. However, if you’ve spotted an error in your VAT return, stay calm and put it right as soon as possible to avoid any penalties from HMRC.


  • How to Amend a VAT Return
  • What Happens If the Error Is Below £10,000?
  • What Happens If the Error Is Over £10,000?
  • Can Incorrect VAT Returns Be Avoided?

How to Amend a VAT Return

The most important part of fixing an incorrect VAT return is keeping an accurate record of any amends you have made to rectify it. Everybody wants to calculate VAT returns quickly and get them out the way, but you need to make sure they’re accurate too. Here’s an example of a careless error. 


Example: John is a builder, he’s VAT registered and submits his returns quarterly. In December 2019, he discovered when preparing the year-end accounts that he recorded a purchase invoice for £1,700 plus VAT twice, once in January 2019 and again in February 2019. 


As a result, he has an over-claimed VAT in the quarter. John amends this in time for his next return and makes it clear. For added peace of mind, he also contacted HMRC to make them aware. 


There are two different steps to take depending on whether you’re correcting errors on VAT returns, which are under or under the £10,000 mark.


What Happens If the Error Is Below £10,000?

If the amount is below £10,000, you can correct the error without reporting it and include it in your latest VAT return. However, you should also voluntarily contact HMRC about it as soon as you can with these details: 


  • When you first discovered the error
  • An explanation to why you made the error
  • The amount of VAT involved
  • The period in which you must make a VAT correction


If you’re not sure, you can contact the VAT Error Correction Team and they’ll be able to offer some assistance. 


What Happens If the Error Is Over £10,000?

If the VAT error is above the threshold, you must formally notify HMRC. You need to be aware that HMRC might choose to issue you with a penalty if it feels that you have acted dishonestly.


These types of errors are subject to interest and penalties:


  • Up to 30% for a careless error. 
  • Up to 70% where it’s seen to be a deliberate error. 
  • Up to 100% where they see the error as both intentional and concealed.


Can Incorrect VAT Returns Be Avoided?

You can avoid inaccurate VAT returns by using a digital solution. Making Tax Digital’s (MTD) objective is to make it easier for businesses of all sizes to submit taxes effortlessly. So when it's time to file your tax to HMRC, you can do so directly from within the app. This will ensure that all the supporting data will be consistent and retained within the app.


The cost of an MTD-compatible app outweighs the time wasted on amending returns and potential fines you might occur. You can start your trial for a MTD-compatible bookkeeping app by just clicking the button below. 

Start Free Trial

Don’t worry if you don’t have a turnover of £85,000 and aren’t VAT registered - you can still use an MTD-compatible app to help you do your books smoothly. Not only is this more efficient but it significantly decreases the chances of errors, which in turn, reduces the need for amendments.


All your records are digital so it’s much simpler to submit VAT returns accurately and avoid any potential fees. However, if you still prefer having your VAT filing in a familiar format like a spreadsheet, you can use our helpful resource. 


Use VAT Return Templates To Avoid Amends

We know that MTD has revolutionised the way we do bookkeeping but moving away from recognisable platforms can take some time. After all, old habits die hard. 


That’s why we designed our VAT return templates. They’re straight-forward and are probably what you’re used to. You can download our user-friendly template and keep your VAT updated.


It’s uncomplicated and completely free to download. 

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