Loading Profile...
How to correct an inaccurate VAT Return
I've made a bit of a mess of my first VAT Return, but not sure how to make the correction in FreeAgent and with HMRC...
My FreeAgent start date is 01 Mar 09, which matches the start of my financial year.
My VAT registration started on 01 Sep 09.
I compiled a manual list of all the purchases prior to 01 Mar 09 on which I was entitled to claim the VAT back and added this to the totals that FreeAgent generated for my first VAT Return. I entered the manually compiled figure as a (negative) opening balance for VAT. So far, so good (I think).
However, after submitting the VAT Return, I realised I had made some mistakes in my data entry and my credit card balance didn't reconcile (I have to enter cc transactions manually - there's no statement download function for this account so I can't import the transactions).
So, I unlocked the VAT period, corrected all the errors and am now confident that FreeAgent accurately reflects what has happened in my business. All my bank, cc and PayPal account balances match FreeAgent. However, the figures I submitted to HMRC are not correct, and the refund I have received from them doesn't match what FreeAgent is expecting to receive.
My questions are:
Thanks!
My FreeAgent start date is 01 Mar 09, which matches the start of my financial year.
My VAT registration started on 01 Sep 09.
I compiled a manual list of all the purchases prior to 01 Mar 09 on which I was entitled to claim the VAT back and added this to the totals that FreeAgent generated for my first VAT Return. I entered the manually compiled figure as a (negative) opening balance for VAT. So far, so good (I think).
However, after submitting the VAT Return, I realised I had made some mistakes in my data entry and my credit card balance didn't reconcile (I have to enter cc transactions manually - there's no statement download function for this account so I can't import the transactions).
So, I unlocked the VAT period, corrected all the errors and am now confident that FreeAgent accurately reflects what has happened in my business. All my bank, cc and PayPal account balances match FreeAgent. However, the figures I submitted to HMRC are not correct, and the refund I have received from them doesn't match what FreeAgent is expecting to receive.
My questions are:
- How do I correct the figures I submitted to HMRC?
- What do I enter into FreeAgent to make everything correct?
Thanks!
I’m anxious
1
person has this question
I have this question, too!
Tell me when someone answers.
The more people who ask this question, the more it gets noticed.
The more people who ask this question, the more it gets noticed.
The company marked this question as answered.
-
Inappropriate?Hello Celine,
OK, there are a few issues here.
Firstly, just for your information, you can in fact enter pre-registration bills that you can claim the VAT for into FreeAgent as a normal bill - so long as they are within the time limit as set by HM Revenue and you put VAT on them, FreeAgent will pick them up.
Secondly, what HM Revenue expect you to do if you get a VAT return wrong is not to correct and re-do that VAT return - it's to correct the mistake on the next return (unless it's over £10,000 worth of VAT in which case you have to write to them separately).
But I can understand why you did it that way, in order to make your credit card reconcile. And so long as you can explain it to a VAT inspector if you get a visit, then you should be fine.
What I would do now, then, is to manually adjust the figures on the next VAT return you do, so that this return and your last return "net off".
So for example:
Your return to 30 Nov 09, when you initially prepared it on FreeAgent, showed a refund due of £1,000.
You submitted that to HM Revenue and they have paid you £1,000.
But then you edited your FreeAgent VAT return and it now shows that you were actually due £1,250.
When you prepare your next VAT return, once you've got the figures from FreeAgent, you'd need to add £250 to the figure in box 4 (and therefore the figure in box 5 would also be different).
So let's say that FreeAgent, for the quarter to the end of February 2010, showed that you should be paying £600.
You take those figures and edit them outside of FreeAgent (don't try and change the February return in FreeAgent). Once you've taken the £250 off, you're left showing that you should pay £350 - so you pay £350.
These two returns would then "net off" like this:
Filed return to 30 Nov 09 shows (£1,000) refund
Filed return to 28 Feb 10 shows £350 payable
Net amount (£650) refund
FreeAgent return to 30 Nov 09 shows (£1,250) refund
FreeAgent return to 28 Feb 10 shows £600 payable
Net amount (£650) refund
So the two amounts net off and at the end of February everything is square.
Does that help, please?
Kind regards,
Emily
1 person says
this answers the question
-
Inappropriate?Emily, that's perfect. Thanks so much for this very detailed and crystal-clear answer.
Céline
I’m relieved and overjoyed
-
Inappropriate?Hello Celine,
No problem at all. If you get stuck with anything else then please don't hesitate to ask.
Kind regards,
Emily
EMPLOYEE
