Correcting VAT Errors

Q: Can I correct a VAT error on my next return?

Yes, if the net error is £10,000 or less (or between £10,000 and £50,000 and no more than 1% of your Box 6 figure) and the error was not deliberate. Simply include the adjustment on your next return.

Q: What is form VAT652 used for?

Form VAT652 (Notification of Errors in VAT Returns) is used to report errors to HMRC that are too large to correct on your next return, or errors that were deliberate.

Q: How far back can I correct a VAT error?

You can correct errors going back up to 4 years from the due date of the VAT Return that contained the error. After 4 years, the right to correct is lost.

Key facts

Errors up to £10,000 (or 1% of Box 6 up to £50,000) can be corrected on your next return.
Larger errors must be reported to HMRC using form VAT652.
Deliberate errors cannot be corrected on your next return regardless of the amount.
There is a 4-year time limit for correcting errors.

Method 1: Adjust Your Next Return

You can correct the error on your next VAT Return if:^[1]

The net error is £10,000 or less, or
The net error is between £10,000 and £50,000 and is no more than 1% of Box 6 (total outputs)
The error was not deliberate

Simply include the adjustment in the relevant boxes of your next return. No separate notification is needed.

Method 2: Tell HMRC Directly

You must report the error separately to HMRC if:^[2]

The net error exceeds the thresholds above
The error was deliberate
You prefer to disclose it separately (even if within the threshold)

Use form VAT652 (Notification of Errors in VAT Returns) to report the error. You can also write to HMRC’s Error Correction Team.

Time Limits

You can correct errors going back up to 4 years from the due date of the return containing the error. After 4 years, you lose the right to make a correction.^[2]

Example: You discover in June 2026 that you overpaid VAT on a return due in March 2023. You can still correct it because it’s within 4 years. But an error from a return due in March 2022 would be out of time.

What Counts as an Error?

Missing sales or purchase invoices
Applying the wrong VAT rate
Including a transaction in the wrong period
Claiming input VAT you weren’t entitled to
Arithmetic mistakes

Will I Be Penalised?

If you discover and correct the error yourself, HMRC is unlikely to charge a penalty for careless errors. However:

Deliberate errors can attract penalties of 20%–100% of the tax lost
Unprompted disclosure (you tell HMRC before they find it) significantly reduces penalties^[3]
Interest may be charged on underpaid VAT regardless

Frequently Asked Questions

Can I correct a VAT error on my next return?

Yes, if the net error is £10,000 or less (or between £10,000 and £50,000 and no more than 1% of your Box 6 figure) and the error was not deliberate. Simply include the adjustment on your next return.

What is form VAT652 used for?

Form VAT652 (Notification of Errors in VAT Returns) is used to report errors to HMRC that are too large to correct on your next return, or errors that were deliberate.

How far back can I correct a VAT error?

You can correct errors going back up to 4 years from the due date of the VAT Return that contained the error. After 4 years, the right to correct is lost.

Will HMRC penalise me for correcting a VAT mistake?

If you discover and correct a careless error yourself, HMRC is unlikely to charge a penalty. However, deliberate errors can attract penalties of 20%–100% of the tax lost, reduced by unprompted disclosure.

Sources

Correct errors on your VAT Return — GOV.UK
How to correct VAT errors (VAT Notice 700/45) — GOV.UK
VAT guide (VAT Notice 700) — GOV.UK