Spotting a mistake in a VAT return is never ideal, but it happens more often than you’d think — especially for busy small business owners. The good news is that HMRC provides clear routes for putting things right. However, the process has changed, and it’s important to know which method applies to your situation.
If you used to rely on form VAT652, you’ll need to update your approach. HMRC withdrew the form on 5 September 2025, meaning VAT errors must now be corrected in one of three ways:
- updating your next VAT return,
- reporting the correction online, or
- notifying HMRC in writing.
Let’s break down how each route works and when you should use it.
- Updating Your Next VAT Return
You can correct an error through your next VAT return if:
- the value of the error is £10,000 or less, or
- the error is between £10,000 and £50,000 and does not exceed 1% of the Box 6 figure (your net outputs) for the return in which the error was discovered.
There’s another important point — this route can only be used for careless errors, not deliberate ones.
When calculating the net error value, you need to work out the difference between:
- any additional VAT you owe HMRC because of the mistake, and
- any additional VAT HMRC owes you.
If the numbers fall within HMRC’s thresholds, you simply adjust your next return.
- Correcting the Error Online
For larger or more serious errors, HMRC requires a direct notification rather than an adjustment.
You must report the error online if:
- it exceeds £50,000,
- it sits between £10,000 and £50,000 but is more than 1% of the Box 6 figure, or
- the error was made deliberately.
To do this, you’ll need to log into your Government Gateway account and provide HMRC with detailed information, including:
- how each error happened,
- which VAT period it relates to,
- whether it involves input or output tax,
- the underdeclared or overdeclared VAT value for each period,
- how you calculated the figure,
- whether any incorrect payment was made to HMRC, and
- the total amount being corrected.
HMRC can only process refund claims if all of this information is provided, so it’s worth double-checking your submission before sending it.
- Notifying HMRC in Writing
If you can’t use the online service — or your circumstances prevent it — you’ll need to write to HMRC instead.
Your letter must include:
- your VAT registration number, and
- all the same details required for an online correction.
Letters should be posted to:
BT VAT
HMRC
BX9 1WR
Keep a copy of your letter and send it via recorded delivery where possible.
Understanding the Time Limits
HMRC expects errors to be corrected as soon as you become aware of them, but there are also strict time limits.
You have four years to correct:
- output tax errors or overclaimed input tax — counted from the end of the VAT period in which the error occurred, and
- underclaimed input tax — counted from the due date of the relevant VAT return.
However, this four-year limit doesn’t apply to deliberate errors. These must always be corrected, regardless of how long ago they happened.
Need Help Fixing a VAT Error?
VAT rules can be tricky, and choosing the wrong correction method can cause even more issues with HMRC. If you think you’ve made a mistake — or you just want peace of mind — get in touch with Jon or the team at Jon Davies Accountants. We’ll help you fix the error quickly, correctly, and with as little stress as possible.
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Any questions?
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