If you notice you have submitted an incorrect VAT return, you can adjust your next return as long as certain conditions are met. The adjustment must be below the reporting threshold, not a deliberate error and for a period within the last 4 years.
You can adjust your next VAT return if the net value of the error is £10,000 or less. You can also adjust up to a maximum of £50,000 if the net error total is up to 1% of the net sales reported in box 6 of your VAT return.
If you are able to amend the next VAT return, you must be sure to keep details of the inaccuracy, such as the date it was discovered, how it happened and the amount of VAT involved.
If the error is above the threshold, was a deliberate error or was for a period more than 4 years ago, this must be disclosed to HMRC using form VAT652. The form can be filled in online, or you can send a letter with the information requested if you prefer.
HMRC will send you a notice advising if the amount you calculated is correct and of any interest or tax you owe as a result. If you do not hear from them within 21 days, it is recommended you contact the VAT Error Correction Team.
HMRC may charge penalties and interest if the error is due to careless or dishonest behaviour, so be sure to tell them in writing about such errors as well as adjusting your VAT return. This could lead to a reduction in the penalty.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.