Contractors' Questions: Can I fix my VAT error?
Contractor’s Question: Due to a spreadsheet glitch, it seems I did not claim enough VAT on my last return and it was for a hefty amount. In fact, I left £12,000 in VAT off an invoice. I don’t have an accountant, so how do I go about correcting this mistake, or is it too late?
Expert’s Answer: No, it’s not too late as VAT can be reclaimed up to four years after the quarter when it should have been included.
But as the amount exceeds £10,000, you will have to inform HM Revenue & Customs using form VAT652. This form gives you the option of including the £12,000 on your next quarterly VAT return or having it repaid separately by HMRC.
In future, you might consider a simple online bookkeeping system instead of a spreadsheet, where errors are common. As well as giving you comfort that your records are up-to-date, it could give greater insight into your company’s finances. Plus, the risk of errors can also be reduced if you use software that allows you to submit your VAT returns directly to HMRC.
The expert was Jon Dawson, partner at Kingston Smith LLP.