HMRC has updated VAT Notice 700/45, tightening the rules on how VAT errors must be corrected. The key change is that any error classed as “careless” must now be disclosed to HMRC even if it falls below the usual reporting thresholds.
What’s changed
Previously, if a VAT error was under £10,000 or 1% of Box 6 (whichever is greater), you could normally adjust it on your next VAT return without notifying HMRC. That process remains in place with one important difference.
- Careless errors must now be reported
Even if the error is small and would previously have been corrected in your next return, HMRC now requires disclosure if it was caused by carelessness. - Examples include human mistakes
This covers issues such as transposition errors, miscalculations, or missed entries where HMRC believes reasonable care was not taken. - New online form
HMRC has introduced a dedicated online form for reporting careless errors, separate from the normal correction process.
Why this matters
The change highlights HMRC’s focus on compliance and accurate reporting. Businesses that fail to disclose a careless error risk penalties even when the financial impact is minor.
Taking the time to review your VAT processes and ensure robust checks are in place will help reduce the chance of mistakes being classed as careless.
How we can help
If you think a past VAT return may contain an error, or you are unsure whether an adjustment qualifies as careless, our team can help you:
- Assess whether the error meets HMRC’s criteria for disclosure
- Complete the new online notification form if required
- Review and strengthen your VAT controls to prevent future errors
Keeping VAT returns accurate and compliant can be challenging, but you do not have to manage it alone.
For more information, contact us on 01142 664 432 or email info@smh.group.
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