Her Majesty’s Revenue and Customs (HMRC) has recently introduced new guidelines to simplify and streamline the process of reporting errors in VAT (Value Added Tax) returns. These guidelines are aimed at businesses and provide a clear framework for reporting errors that exceed the reporting threshold. In this article, we will explore the key aspects of HMRC’s updated guidance and how it impacts businesses.

1. Introduction

The HMRC’s new guidance emphasizes the importance of reporting errors in VAT returns promptly and accurately. It aims to enhance transparency, improve compliance, and simplify the error correction process for businesses.

2. Reporting Process

The updated guidelines provide businesses with a link to an online service that helps determine whether an error can be rectified within the VAT return or if a separate notification using form VAT652 is required. This online service offers clear instructions on how to proceed and simplifies the error reporting procedure.

3. Adjusting Errors within VAT Return

Under the new guidelines, businesses have the flexibility to adjust errors within their VAT return under certain criteria. If the net value of the errors falls below £10,000 or if it falls between £10,000 and £50,000 but does not exceed 1% of the total output tax due on the VAT return during the relevant period, businesses can correct the errors within their VAT return. This provision allows for more flexibility in addressing inadvertent mistakes without the need for separate reporting.

4. Separate Reporting for Errors Exceeding Thresholds

However, if the errors exceed the specified thresholds mentioned earlier, businesses are required to notify HMRC separately using form VAT652. This form can be completed online or by utilizing the printable version, depending on the business’s preference. It is essential to report any errors surpassing the reporting threshold promptly to ensure compliance with VAT regulations.

5. Streamlining Processes and Reducing Administrative Burdens

The introduction of these new guidelines demonstrates HMRC’s commitment to streamlining processes and reducing administrative burdens on businesses. By providing businesses with a clear framework and online tools, HMRC aims to facilitate accurate reporting and ensure compliance with VAT regulations.

6. Familiarization and Compliance

It is crucial for businesses to familiarize themselves with these new guidelines and ensure they comply with the reporting requirements for errors in VAT returns. Prompt and accurate reporting not only helps maintain good financial practices but also strengthens the relationship between businesses and HMRC.


In conclusion, the recent release of new guidelines by HMRC regarding the reporting of errors in VAT returns underscores their commitment to simplifying processes and improving compliance within the tax system. Businesses are strongly encouraged to review the guidelines and utilize the online service provided by HMRC to determine the appropriate course of action for addressing errors in their VAT returns. By adhering to these guidelines, businesses can ensure timely and accurate reporting while maintaining a strong relationship with HMRC.


Q: What is the purpose of HMRC’s new guidance on VAT return errors?

A: The purpose is to streamline the error reporting process and enhance transparency.

Q: Can errors below a certain value be adjusted within the VAT return?

A: Yes, errors below £10,000 or falling between £10,000 and £50,000 but not exceeding 1% of the total output tax due can be adjusted within the VAT return.

Q: What happens if errors exceed the specified thresholds?

A: Errors exceeding the thresholds require separate