I submitted my last quarter VAT return with a mistake. I have put VAT on an incoming payment that should not have had VAT on it.
We reported in to HMRC but we have not heard anything, we are about to submitted this quarter and didn’t know if there was a way of correcting it in this one.
Thank you, Beth
Once the return is submitted the only people who can do anything to change it are HMRC.
When you say you put VAT on an incoming payment has this payment been allocated to an invoice, and if so did the invoice also have VAT applied? Or was it a pre-payment where you just set the VAT rate for the payment without assigning it to an invoice at the time?
If the payment is assigned to an invoice at 20% VAT then the first thing you’ll need to do is get in touch with your customer and explain to them what has happened - if they are themselves VAT registered they’ll likely already have reclaimed the 20% VAT on their own VAT return and may not take kindly to being asked to help you correct things. The actual correction would be for you to create a credit note from the 20% invoice, hold the funds on account, then create a replacement 0% invoice and log payment → apply from credit. If the customer is not VAT registered this is cost-neutral for them, but if they are then it effectively increases the cost to them by 20% so you may choose to just swallow the cost yourself to retain some good will/avoid a bad review on social media…
If it’s a pre-payment where you logged the original payment as 20% but later attached it to an invoice at 0% then I believe everything should straighten out on your next VAT return automatically as QuickFile will account for the difference between the VAT you declared on the payment and the VAT you actually invoiced by adjusting your box 1 automatically.
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