If you identify an error in an earlier VAT return, you can correct it by including the net effect in the latest return, providing that the error is no more than the greater of £10,000 and 1% of the Box 6 figure (total sales ex. VAT) on your VAT return for the period that you discover the error, subject to an upper limit of £50,000. Your VAT workings to correct the error should of course be retained. To avoid a penalty, you also need to report certain errors to the VAT Error Correction Team using form VAT 652.