Management Recharge Overstated - Adjustment & VAT Effect

clairejm1981

A management recharge between a registered charity and it's trading subsidiary has been overstated which has resulted in exceeding the VAT registration threshold. (note: the charity is not VAT registered but the trading subsidiary is, and they are not a VAT group). The management recharge has been recalculated for the prior year, but should a prior year adjustment be posted in the prior years accounts or should it be corrected in the current year figures? what would be the position in terms of contacting HMRC to disclose the fact the VAT threshold was exceeded but was due to an overstatement of the management recharge?
Opinions appreciated.