Worried you have made a VAT error and unsure what to do? Most frequent questions on VAT errors, VAT 652 forms and ways to correct them.
There are several reasons why we make mistakes in VAT returns. In most cases, the mistakes are inadvertent and relate to miscalculations or wrong rates applied to your sales. Sometimes, VAT mistakes are the result of misunderstanding of VAT regulations or their misinterpretation.
VAT regulations are subject to constant changes, and lack of training of awareness may lead to oversights. In any of the above cases, it is important to take measures as soon as the mistake is identified to avoid HMRC instigations and potential penalties.
VAT652 form is one of the measures a business or an individual could use to report and disclose VAT errors. In this article, we will explain the most common ways to disclose VAT errors and the VAT652 form.
With any disclosure to HMRC or investigation, it is important to seek appropriate advice and guidance from professionals. If you are unsure how to rectify errors you made in your VAT return, speak to one of our experts using the chat below or write to info@uk-accountant.com.
Frequently asked questions – VAT652
What is a VAT652 Form?
VAT652 is the official way to use to correct VAT return error when the amounts to be corrected exceed certain thresholds. The form is an important tool to ensure the compliance and integrity of in the VAT reporting system.
How to correct VAT errors and adjustments? Form VAT652
Form 652 cannot be used to correct any historical mistake you make in your VAT returns. The mistakes to report in this form should meet the following criteria:
When the net value of the errors found is more than £10,000, or 1% of the total sales figure on your latest VAT return, up to a maximum of £50,000.
You cannot submit form VAT652 when the error was initially discovered by HMRC prior to being submitted voluntarily. This form should be used primarily for voluntary disclosure and genuine mistakes. Deliberate errors should be disclosed differently, and special advice should be sought in these situations to avoid criminal investigations.
How to complete and submit from VAT652?
- Complete the form, providing your VAT number, describing each error and the correct VAT amounts for each accounting period.
- calculate the total for all errors.
- submit the form to HMRC via email or post.
What happens after submission?
HMRC will check the form and adjust the VAT records accordingly. The submission of VAT corrections may result in VAT repayment or payment due. HMRC may also rule a penalty for underpayment.
How to contact the HMRC VAT error correction team?
Submit form VAT652 directly to HMRC VAT error correction team. You can send it for inbox.btcvaterrorcorrection@hmrc.gov.uk or by post. You will receive an email acknowledgement receipt automatically.
What is the penalty for VAT error correction?
Penalties HMRC will issue will depend on the nature and severity of the mistakes.
If the error is deemed as negligence: penalties start from 0.3% and can be up to 30% of the potential lost revenue.
If the error is deemed ‘wilful and concealed’, the penalty can be up to 100% of the lost revenue.
In all of the above situations, the penalties can be mitigated and reduced if the disclosure is made voluntarily and before HMRC discover them.
Will submitting a VAT652 automatically trigger a VAT inspection?
Depending on the amount of the disclosure and the severity of the mistake, HMRC may launch an enquiry. In this case, an HMRC inspector will contact you to ask for more information: evidence to support the information on the from, more detailed justification of the calculations, and reasons why the mistake happened. They explanation should contain the measures the business introduced to avoid such errors in future.
If reference was made to HMRC notices or advice you sought from HMRC over the helpline or email, you should be able to produce the date and more details how the advice was received.
We recommend seeking advice from professional accountants who can help you submit the VAT652 form. If you discovered a mistake in your VAT return, and need to advise HMRC about it, contact us below.
What would normally trigger an HMRC investigation?
There are several reasons that may flag the unusual activity or filing totals:
- Repeated or frequent errors in VAT return
- Inconsistences discovered during previous audits
- Discrepancies between VAT returns and business accounts
- Reports from external sources
- Checks that are specific to certain sectors where VAT errors are more common.
Companies can establish good standing by establishing trustworthy relationship with HMRC and correcting their VAT errors in good time by submitting forms VAT652 as soon as the error is identified.
How far back can I correct errors?
Corrections for errors can be made within four years from when the error occurred.
Businesses can correct significant errors in their VAT reporting and maintain good standing with HMRC by ensuring they understand and utilise the VAT652 form properly, avoiding potential penalties and fostering a trustworthy relationship with the Revenue.
If you believe you may have made errors in your VAT filings, or require support in understanding your VAT obligations, we can support you. Our team of specialists can provide a VAT health check to understand your VAT compliance and advise on remedying any errors Contact our specialist team using the form below to arrange an initial conversation.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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