how do I correct a supplier vat invoice on an old vat return

Hi, Enquiries.

Under Making Tax Digital (MTD), once a VAT return is submitted to HMRC, it cannot be changed or undone. However, you can correct errors by adjusting your VAT account in the next VAT return.

To adjust your current VAT account to correct errors on past returns. The following conditions should be met: 

• The net value of the error is more than £10,000, or
• The error is more than 1% of your Box 6 figure for the period of discovery (with a cap of £50,000), or
• The error was deliberate or relates to fraud, regardless of value, or
• It occurred more than 4 years ago

Before proceeding, keep in mind that manual adjustments will impact your VAT control or VAT suspense account. To ensure you record this adjustment accurately and avoid issues, it’s a good idea to consult with your accountant or tax advisor.

Once you're ready, here are the steps on how to adjust VAT box 1, 2 and 4: 

1. Go to Taxes and select VAT.
2. Next to the period you're submitting for, select Prepare return.
3. Next to the VAT line you'd like to change, select Adjust.
4. Choose an Adjustment Date and Tax rate.
   • Note: If you don't select the right VAT code, it won't appear on reports or your tax return.
5. Select Adjustment Account ▼.
6. Choose an account.
   • If you're making an adjustment because you received credit and owe less tax to the government, choose an income account you created for this purpose.
   • If you're making the adjustment to include a fine, penalty, or interest on a VAT return, choose an expense account, such as Interest Expense or Non-deductible Penalties.
7. In the Adjustment amount section, enter the amount of the adjustment.
8. Enter a Memo to describe the adjustment. It's good practice to include this, since it will help identify the adjustment.
9. Select Save.

To proceed with the other steps, see the To adjust VAT box 6, 7, 8 and 9 section through this article: Adjust Your VAT Liability.

Once done, the program automatically adds a journal entry to show the adjustment. When you file your next return, this will include the adjustment.

Please feel free to leave a comment below if you have any further questions.