If you’ve overpaid VAT on a submitted VAT Return, don’t worry, HMRC provides a process to correct genuine mistakes. The right method depends on the size of the error and when you discovered it.
For smaller errors, you can usually correct the overpayment by making an adjustment on your next VAT Return. In most cases, this is allowed if the net value of the error is £10,000 or less, or between £10,000 and £50,000 provided it does not exceed 1% of the value shown in Box 6 (total sales) on the original VAT Return. You should keep detailed records explaining the error, how it occurred, and how you calculated the correction.
If the error is above these limits, or you prefer not to adjust it through your next return, you must notify HMRC separately using the VAT error correction process. HMRC will review the information and advise whether a repayment is due or if further action is required.
It’s important to correct errors as soon as you become aware of them. HMRC has announced plans to strengthen taxpayers’ obligations to correct inaccuracies promptly, reinforcing the importance of taking action without unnecessary delay.
If you’re unsure whether your error qualifies for adjustment or notification, seeking professional advice can help you avoid penalties, interest, or further compliance issues. An accountant can also ensure your VAT records remain accurate and fully compliant with the latest HMRC requirements.
