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How to Submit a VAT Return - File VAT Return

Submitting your VAT return can be a challenging task, especially for those who are new to it. However, it is an essential part of running a business that cannot be ignored. In this guide, you will have a clear understanding of how to submit VAT return accurately and confidently. Whether you're a small business owner or a financial professional seeking clarity, we've got you covered.

By

Chris Andreou

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What is a VAT Return?

A VAT return is a document you must send to HMRC to report the amount of Value Added Tax (VAT) you've collected and paid, and total sales and purchases for a specific period. This report helps the government keep track of your VAT transactions and determine the amount of VAT you owe or are owed. VAT-registered businesses, including small ones, must submit returns to tax authorities on a monthly, quarterly, or annual basis, depending on turnover. This digital process involves submitting returns online using compatible software through the government gateway account.

How is VAT Calculated?

Value Added Tax (VAT) is a consumption tax levied on the value added at each stage of the supply chain. It is essential to understand how VAT is calculated to ensure that your business meets its tax obligations accurately. Let's break down the process step by step:

1. Identify Output VAT: Output tax is the VAT you charge to your customers on your goods and services. This is the amount you collect on behalf of HMRC. It's crucial to correctly calculate the VAT rate applicable to each transaction, as different goods and services may have different VAT rates.

2. Determine Input VAT: Input tax, on the other hand, is the VAT you pay when you purchase goods and services for your business. This includes VAT paid on supplies, such as equipment, inventory, and services. It's important to keep detailed records of these transactions to claim back the input tax you've incurred.

3. Calculate the Difference: To find the amount of VAT you owe to or can reclaim from HMRC, subtract the total input tax (VAT you've paid) from the total output tax (VAT you've charged your customers). This calculation reflects the VAT liability you must report.

Output VAT - Input VAT = Amount of VAT owed to HMRC

How Do I Get a VAT Number for My Company?

Register for VAT online on HMRC's website.

To become VAT registered, create a VAT online account, which is also referred as a Government gateway account.

Mostly within 30 days of VAT registration, you will get a VAT certificate which includes your VAT number. For online VAT registration, your VAT certificate and company VAT number will be sent to your VAT online account.

Follow our detailed UK VAT registration guide to get your VAT number.

How Often Do I Need to File a VAT Return?

Most businesses usually need to submit quarterly VAT returns every 3 months at the end of the accounting period. You’ll need to specify the dates of your accounting period on your VAT Return, for example, 1 January to 31 March.

If you’re registered for VAT, you must submit a VAT Return even if you have no VAT to pay or reclaim.

When should I File a VAT Return?

You need to submit your VAT return one month and seven days after the end of your VAT period which occurs every 3 months (quarterly). It means you need to submit the VAT return 4 times a year. You can find when your VAT returns are due through your VAT online account.

If you’re registered for VAT, you must submit a VAT Return even if you have no VAT to pay or reclaim.

What to Include in a VAT Return?

  • Total sales and purchases
  • Amount of VAT owed
  • Amount of VAT you can reclaim
  • Amount of VAT you owe for business expenses

How Do I Submit a VAT Return?

There are 4 methods to submit your VAT return:

  1. Using accounting software like Freeagent that is compatible with Making Tax Digital
  2. Appointing an agent or a small business accountant
  3. Using your VAT online account - only if you use the VAT Annual Accounting Scheme
  4. Submit your return by post only if you have an exemption from Making Tax Digital for VAT

MTD for VAT

From 1st April, 2022, Making Tax Digital (MTD) for VAT is a mandatory requirement for most businesses. It requires you to keep digital records and submit your VAT return using MTD compatible accounting software.

Step-by-Step Guide to Submit VAT Return Online

  • To submit VAT return online, log in to your government gateway account using the government gateway user ID.
  • Ensure you have compatible software that complies with Making Tax Digital.
  • Prepare necessary documentation, including sales invoices, purchase invoices, bank statements, VAT registration details, and VAT return calculations.
  • Enter VAT return information, review it for accuracy, and submit it online following software instructions.

VAT Return Deadline

The deadline for submitting your VAT return online is usually 1 month and 7 days after the end of your accounting period. This is also the deadline for paying HMRC. You need to allow time for the payment to reach HMRC’s account.

Payment Date for VAT

For businesses that pay their VAT monthly or quarterly, the deadline for paying the VAT you owe is 1 month and 7 days after the end of the VAT period. You must pay VAT to HMRC electronically, for example through Direct Debit, through debit or corporate credit card or internet banking.

Late VAT Return or Payment Penalty

For missed VAT return deadline, HMRC will send you a ‘VAT notice of assessment of tax’ telling you how much VAT they think you owe. For each late VAT return submission including nil return, you’ll be issued a penalty point. Once you reach your penalty point threshold, you’ll get a £200 penalty.

For missed payment deadline, penalty is charged based on how late you pay.

Ready to Submit VAT Return with Confidence?

At GoForma, we specialize in helping small businesses manage their finances, including VAT compliance. Our experienced team of accountants ensures that your VAT returns are accurate, on time, and free from penalties. Check out our Google and Trustpilot reviews to see what our clients have to say about our services and excellence.

Don't let VAT return complexities overwhelm you. Book a free consultation today, and let's work together to ensure your VAT compliance is stress-free and error-free. Hire GoForma's small business accountants and experience peace of mind in managing your finances.

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