What should a business do if it discovers an error in its previous VAT returns?

When a business discovers an error in its previous VAT returns, the most appropriate action is to amend the return to correct the mistake. VAT regulations require businesses to ensure that their VAT returns are accurate and to take corrective action if any discrepancies are identified. This is crucial not only to comply with legal obligations but also to maintain transparency and integrity in financial reporting.

Amending the return allows the business to correct the reported figures, which can affect the amount of VAT payable or reclaimable. If not addressed, the error could lead to potential penalties or interest charges from tax authorities, as well as mishandling of tax liabilities. By taking the initiative to amend the return, the business protects itself against future issues and demonstrates responsible tax governance.

This approach helps ensure that the business remains in compliance with VAT legislation and fosters trust with stakeholders by accurately reporting financial information.