Update: VAT Notice 700/45 & Withdrawal of Form VAT652
HMRC has updated VAT Notice 700/45, which explains how to correct mistakes on past VAT returns.
At the same time, Form VAT652 has been withdrawn. Businesses must now use HMRC’s online service (or write to HMRC) to report larger or more serious VAT errors.
Small errors
You can still correct small mistakes on your next VAT return if:
- The net VAT error is £10,000 or less, OR
- The error is between £10,000 and £50,000 and is less than 1% of your Box 6 (outputs) on the return you are correcting
These are known as “Method 1” corrections.
Record what happened and how you calculated the correction.
Larger or serious errors
You must report to HMRC directly if:
- The net error is over the thresholds above, or
- The error was careless or deliberate
This is now done online instead of using Form VAT652 (“Method 2”).
Written notification to the VAT Error Correction Team is still allowed if required.
Why this matters
- VAT652 is no longer accepted
- HMRC is moving fully to digital error reporting
- Errors corrected via a VAT return do not automatically reduce penalties if the mistake was careless
- Keep clear records of any error and correction process
What to do next
- Update your internal processes — stop using VAT652
- Make sure staff know the online VAT error reporting route
- Keep full notes when correcting errors
- Seek advice for large or potentially careless errors