How to make corrections in a VAT locked period

This article explains how to make a correction in FreeAgent that falls into a VAT locked period if you've already filed your VAT return. The correction, or deleted item, will then show on your current, open VAT return.

If the correction relates to a transaction dated in a previous VAT registration period, find out how to make corrections in a previous VAT registration period.

Editing invoices in a VAT locked period

An invoice is a legal document between you and your customer. If it’s been sent to them, but needs to be updated, we recommend that you create a credit note, net it off with the historical invoice and then create a new invoice.

Alternatively, you can choose to edit the invoice instead.

How edited transactions will be dealt with for VAT

If you edit or delete a transaction in a VAT locked period, FreeAgent will preserve your existing locked VAT return and make any necessary changes on your next unlocked VAT return. This is per HMRC’s guidance for how VAT errors should be corrected.

HMRC only allows errors to be corrected through VAT returns that are within four years of the transaction date. If the transaction you edit is dated more than four years before the beginning of your current open VAT return, FreeAgent won’t make any changes. For any older errors you would need to complete and file a separate HMRC form, form 652.

How to add a transaction that doesn’t affect VAT

If you have filed VAT returns and you need to add bank transactions, bills or expenses, but you don’t want FreeAgent to automatically make the changes on your next unlocked VAT return, select 'Out of Scope' from the 'VAT' rate drop-down menu.

Screenshot 2023-08-16 at 11.53.53.png

How to make the corrections

Edit your invoicesbills, bank payments and expenses as you would do to correct any other errors.

FreeAgent will then make those changes on your next unlocked VAT return.

How corrections are displayed on the full report

Corrections will show on the VAT full report dated the first day of the next open VAT return. It's important to note that this doesn't change the date of the original transaction, and if you select any corrections on the full report then it is possible to see the original transaction date. These items are all displayed at the top of the report so they are easier to identify. This is also how FreeAgent will display any pre VAT registration items.

Did you find this article useful?