HMRC has confirmed that businesses can no longer use form VAT652 to correct errors in their VAT returns. Instead, all VAT error corrections must now be made either online or in writing, marking a significant shift away from paper-based error reporting.
 
This change reflects HMRC’s wider move toward digital transformation and improved efficiency in VAT compliance processes.   

Form VAT652, known as the VAT Error Correction Notice, was the paper-based method by which VAT-registered businesses notify HMRC of errors in past VAT returns.

The form has traditionally been used when errors exceed certain thresholds (or fixed monetary limits) or when taxpayers are required to separately notify HMRC rather than simply amending a later return.
 
Even though Form VAT652 has been withdrawn, the rules for when you must separately notify HMRC of a VAT error remain unchanged. There are two key tests: 

• Monetary threshold: £10,000 rule: If the net value of the errors is £10,000 or less, you can usually correct them in your next VAT return. 

• Upper threshold: between £10,000 and £50,000 (additional test): If the net value of the error is more than £10,000, you can still correct it on your VAT return ONLY if it is also less than 1% of your box 6 figure (total sales excluding VAT) for that return. 

What does this mean for businesses?  

Error correction notification: If you discover an error in a previously submitted VAT return (subject to the relevant thresholds or rules for separate notification), this should now be notified to HMRC by either: 

• Updating the next VAT return (if below applicable thresholds)  
• Making the correction online (using HMRC’s online form submission)  
• Sending the correction in writing by post  

Online / digital submission preferred: The shift away from the VAT652 form suggests that online notifications will increasingly be the standard, providing a more reliable record and quicker processing. 

Be aware of thresholds and time limits: Businesses must continue to follow the rules around what errors need to be separately notified. The underlying legal requirements remain. The method of notification has changed, but the criteria have not changed. 

How can we help? 

If your business has any concerns about a potential error, how this should be notified to HMRC, or any assistance with communicating this to HMRC, please get in touch with our VAT team on vat@ct.me or 0131 558 5800.