Manual adjustments

MTD compliance

Whilst the VAT Return is primarily driven from transaction data, for a variety of reasons it may be necessary to make manual adjustments to the boxes in order to prepare a correct return according to the VAT rules. In the context of Making Tax Digital, HMRC recognise that such adjustments are a fundamental part of the return process. 

VAT Notice 700/22 paragraph 4.4 sets out the overall approach to adjustments under MTD. This paragraph states that where adjustments are allowed or required, these must be recorded in functional compatible software. The amount of the adjustment only is required, and not details of any underlying calculations. The digital record does not have to be changed as the result of making an adjustment.

The notice at various points lists the following as examples of where a manual adjustment would be allowed or required: 

  • capital goods scheme

  • mixed supplies

  • flat rate scheme

  • margin schemes

  • partial exemption

  • road fuel scale charges

  • correcting mistakes

Adding a manual adjustment

Manual adjustments are created from the Preview and analysis tab. Referring to the list displayed on the left hand side of the screen, select the category that corresponds to the box that is to be adjusted:

  • Output VAT - adjust box 1 and/or box 6

  • EU acquisitions - adjust box 2 and/or box 9

  • Input VAT - adjust box 4 and/or box 7

  • EU supplies - adjust box 8

You will be taken to the relevant adjustments summary where you can select Add adjustments to create a new adjustment. The resulting Add adjustment dialog will prompt you to enter the net and/or VAT amount of the adjustment along with a description of why the adjustment is being made. You can also upload documentation that supports the need for the adjustment to be made.

Select Add adjustment to create the adjustment. Upon selecting Back to preview, the VAT Return will be recalculated including the manual adjustments created. Details of the amounts of the adjustments will be included on the Output VAT or Input VAT summary report statements.

From the manual adjustments summary screen, use the relevant icons to either Edit or Delete an existing adjustment.

Once you have added any manual adjustments that you require and you are happy that your VAT Return calculation summary is correct, click on Next.

 

 

 

 

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