Frequently Asked Question

Correct VAT from Prior Period
Last Updated 5 months ago

With MTD it is no longer possible to just manually adjust figures before filing the VAT Return.

This is not really a problem at all. Previously, adjusting the calculated figures due to prior period errors was in fact the wrong way of dealing with such errors. It was done for reasons of carelessness or ignorance.

The proper way, and in fact the simplest way, is to just reverse out the original error, in the current period, and in its place post the correct entry.

That is it.

Let us take an example: A £500 + £100 VAT expense was originally entered in error as a gross £600 with zero VAT. Thus the VAT Return failed to reclaim the £100 VAT.

In the next or later period, just enter a reversal of the original figures: 600 + 0 VAT.

Then enter the correct figures: 500 + 100 VAT.

Both total £600 so in cash terms they cancel each other out so that a Manual Reconciliation can be done for the two.

The VAT Return will now reclaim the missing £100 VAT.

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