Hi, a client had his accounts done by a bookkeeper through his first financial year. Now he came to us as they fell apart. We are doing his corporation tax report as it is due soon and it turned out that his VAT liability has been miscalculated in every period. Now he opted out from VAT (due to the recent changes) and so we cannot adjust his VAT liability on the next VAT return (it is only £77 that he needs to pay to HMRC). So my understanding is that the VAT correction form is the only way now (?). Where it says 'payable to HMRC', should here be provided the correct VAT liability, or the difference....? Thank you
Are you saying that the previous bookkeeper made a boob, or the client? Yes you need to compete that form, plus a letter stating careless, deliberate or whatever to keep penalties down.
Can you provide a screen print copy of that part of the form so it can be seen in context to answer your last q? I suspect the former but want to see the form first
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
the amount on the screenshot is the amount that should have been declared, £70+is the amount miscalculated (the difference). I am not sure which should be provided in the box - the correct amount or the difference?? What goes into box: payable to HMRC? There were 4 VAT returns and each one was miscalculated. First was higher than it should be and the rest was lower than it should be. I understand the correction has to be done for each period. The company was on a flat rate, there was no VAT reclaimed.
Just a thought-are the vat issues as a result of timing differences, as these wouldn't necessarily show up on reports from some of the software or is this definitely as the result of errors?
The screen shot is looking for the amount owed to/from HMRC. That is mainly what they are concerned with. Given it spans four returns I would suggest you phone HMRC and ask what else they want, but given the low value, I would be tempted to just include the total now due to them, with a further explanation detailing the rest in your efforts to keep the penalties down.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thank you Joanne. I have no idea how the lady calculated her figures.....it was fairly simple: one client, regular invoices, invoice date is the same as the payment date, flat rate, no purchases that would qualify here (over £2k etc), yet the figures are different....we don't have the actual reports, just summary from HMRC online account and bank payments from company's business bank statements.....
I believe the amount you put in the box is the amount of the error, rather than the correct figure that should've been submitted for that period. It says on the cover page "You should enter details by VAT period of any underdeclarations and overdeclarations".
Also from memory I think that outputs and inputs must be declared separately under each period so careful if the £70 is for say, £100 output VAT less £30 input VAT as it'll need to be split.
Its the usual unhelpful online form filling exercise with HMRC. They dont provide proper guidance as you go and you have no idea what is coming next so that cant even guide you, because you cant move on to the next page as you can with paper based until you have filled in a box. Unless someone has done one before and Ive never had cause to use the online 652 form (yet).
The screen shot indicates it is the amount of the total overcharge/undercharge as it states 'payable to HMRC' or 'repayable to you'. Im wondering if it then goes on to show the calcs, which would make sense and then one should be done for each quarter, although thats really why I suggested a phone call. Although by HMRC standards Ellie could still be waiting on the phone.
Be good to have an update from Ellie as this may help others in the same position.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi, the form is fairly short. It asks you at the top whether it is an input or output, and then it asks you for an amount. It does not show any calculations. You need to fill in for each period separately (if you have more than one period you need to click on 'add period') and then input the amount (the difference). In my case it was an underpaid output tax.
