How do I correct VAT errors ?

When to issue a credit note/re-invoice

• If the VAT error on sales invoices is less than £2,000 in total, issue the credit note/re-invoice. This will automatically result in an adjustment to the figures on your next VAT return

When to claim bad debt relief

• If an invoice has not been paid for six months after the due date for payment (i.e. not the invoice date). You then need to make an entry in the bad debt relief account and adjust Box 4 of your VAT return.

When to make a voluntary disclosure

• If the VAT error on sales invoices is more than £2,000 in total. Then tell the VATman in writing by completing form VAT 652 which can be downloaded from the government website HERE
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• Note: you can only adjust errors covering the last three years.