I've noticed that I made a stupid mistake on a vat return I completed for my client last quarter. The result of this is that my client will have additional VAT to pay of £860 . Do I need to inform HMRC of the error, in order to pay the additional vat due?
And will my client have to pay any penalties or interest as result of this (really, really hope not!!!).
As the error is less than £2,000 you can adjust your VAT account and include the £860 as an adjustment in the next VAT return that you prepare. No need to inform the HMRC if you dont want to.
HM Revenue & Customs would only charge your client interest if the error had been more than £2,000 net. Therefore you dont need to worry!
Fay is right. But i will tell you additional information, if the net error from the previous return more than £2000, you have to immediately contact the HMRC by letter or on VAT 652. The information provided to the VAT office should be: - the amount of the error - the VAT period in which it occurred -whether the error was involving input or output tax -whether the errir is in favour of the business or HM Revenue and Customs.
Many thanks for the additional information. I hope I never need to use form 652, but if I make a bigger mistake in the future at least I now know what i need to do to correct it!