VAT correcting errors

VAT correcting errors

Didn't find your answer?

Hi everyone

In a bit of a nightmare situation at the minute. I got a new book-keeper and I provided her with all of the sales reports etc. Our accountant advised us a 652 form must be submitted to HMRC for 40k in sales which weren't listed in January 2013.
Just now, I've checked the VAT report that our new book-keeper has done and have noticed that obviously she hasn't checked whether certain sales figures are VAT inclusive. The Jul14 quarter sales were overdeclared and we should've been paying £3k VAT instead of £7k... and the Oct14 period we should've been paying around £11k VAT instead of the 8k she submitted.

I was wondering what I should do about this? As far as I know, she has not submitted a 652 form before. Does anyone know what the process is? I have read through the notes and there are some lines which suggest that for the more recent periods, I don't have to submit a 652, I can just adjust the next VAT return. Is that correct? I'm aware that a 652 will have to be filled out for sure for the Jan13 quarter but does anyone know if they will give a penalty on this and what is the penalty based on? The level of sales that were underdeclared or the amount of VAT underdeclared?

Many thanks in advance
Jack

Replies (3)

Please login or register to join the discussion.

avatar
By Take VAT
10th Apr 2015 07:45

My understranding
Is that for errors less than 10k or upto 50k if 1% of box six within the last 4 years can be corrected on your next vat return with out the need of a 652. Due to the quantum of the errors I agree with you accountants that a 652 is required. From my experiance I would advise lumping all errors together and clearing the past with one broad brush rather than splitting them up and trying to get some through your return. Along with the 652 I would draft a note explaining how the errors arose and what steps have been taken to ensure the errors don't happen again. assuming the errors were not careless or deliberate you are making a voluntary disclosure and from my experiance would not expected penalties to be raised! But you never know!

Thanks (0)
avatar
By cparker87
10th Apr 2015 09:25

652
Required where the error is >£10k VAT net (or >£50k and >1% Box 6). This means that you can offset one error against the others to arrive at a net error.

E.g. January 2013 = circa 8K VAT, less £4k for July, add £3k for October. The net result is £7k under declaration. That means it can be amended on a VAT Return.

However, I would still advise that a letter is sent to the VAT corrections team disclosing what you have done, how the error came to be and that you have corrected it. In the event of an investigation HMRC may well still charge penalty for non disclosure as merely amending on a return is not informing them.

Thanks (1)
avatar
By shaun king
10th Apr 2015 09:55

Are you saying

that the amount of VAT underdeclared is approx £6k?

Thanks (0)