Hi - has anybody ever had to do an overstated amendment for VAT? I have recently taken on a client and their previous vat return overstated sales by 9k, I know you have to fill in a form which I have. my question is on the actual vat return do I put the amended figures or the actual figures which relate the this period and just put the amendments on the form??
Never had to do this before any help would be appreciated.
You can deduct the £9k from Outputs, but because this is a new client I'd want to be sure that no other errors are going to come to light for any period for which you are taking responsibility. This is because it is the net amount of all errors that matter for the notification form and £9k is near the threshold.
I like to use the actual 652 form for my files to list all errors found, say in the accounting year, so that there is a clear trail from my bookkeeping entries to the submitted VAT Return.
You've said 'sales' though and at 20% they are well below the threshold. You would just reduce the box 1 figure by £1800 and box 6 by £9k.
Can I ask if the value was above the threshold would you not amend box 1 & box 6 and just enter the error on the form, just for future reference. Thanks
I'll quote from this HMRC web page because I didn't mention the 1% ceiling on reporting errors. It might be an idea to print it out and high-light pen any matters relevant to your client.
Action you must take at the end of your VAT accounting period
At the end of your VAT accounting period, calculate the net value of all the errors you found during the period that relate to returns you've already submitted - that is, add together any additional tax due to HMRC, and subtract any tax you should have claimed back. Don't include any deliberate errors - you must tell HMRC about these separately. What you do next depends on whether the net value of the errors is greater than the error correction reporting threshold. This is the greater of:
* £10,000 * 1 per cent of the box 6 figure on your VAT Return for the period when you discover the error - subject to an upper limit of £50,000
If the net value of previous return errors is less than this threshold then, if you prefer, you may correct the errors by making an adjustment on your current VAT Return - see the section in this guide on how to adjust your VAT Return.
But if the value of the net VAT errors discovered is above this threshold, you must report them to HMRC separately and in writing - see the section in this guide on how to tell HMRC about errors.
--------------------------------
The threshold was £2000 the last time i had to inform Customs & Excise, so I don't know how long ago that was. Obviously a fine toothcomb is in order to discover any other errors.
