How to file a VAT return

So, you’re wondering how to file a VAT return! Maybe your business has grown and is reaching the VAT registration threshold? Or perhaps you’re setting up a new business and you expect to have a decent turnover from the get-go. Either way, congratulations!

No matter what reason you have for wanting to know how to file a VAT return, this blog talks you through the process. That said, if you’d rather not have to deal with VAT admin, check out our VAT Returns Service. We can not only make sure your returns are filed on time, but we can give you advice on which VAT schemes are likely to benefit you the most.

Step 1: make sure you’re registered for VAT

Before you can file a VAT return, you need to make sure you’re registered for VAT.

You must register for VAT if your total taxable turnover for the last 12 months goes over £90,000. Similarly, you also have to register if you expect your taxable turnover to exceed £90,000 in the next 30 days.

Some businesses with a lower turnover may decide to register for VAT. This can sometimes save you money. You can learn more about registering for VAT here. However, you need to be careful when you register as HMRC can and will turn down certain VAT registration applications.

Step 2: keep digital VAT records

If you register for VAT, HMRC will automatically sign you up for Making Tax Digital (MTD) for VAT. You will then have to keep digital VAT records using MTD-compliant software such as Xero or FreeAgent. Records you need to keep include sales and purchases, the VAT charged and paid, plus dates and VAT rates.

Step 3: take note of VAT return deadlines

You normally need to file your VAT return one calendar month plus seven days after the end of an accounting period. This date is also when payment is due. This means you need to make sure your payment reaches HMRC on or before the deadline.

For example, if a VAT quarter ends on 31st March, you need to file a VAT return and pay by 7th May. Similarly, if the quarter ends on 30 June, you file the return and pay by 7 August.

You can check when your VAT return and payment deadlines are by logging in to your VAT online account.

Step 4: file your VAT return

When you are ready to file a VAT return, you do it using your MTD-compliant accounting software.

Information you’ll need to provide includes:

• Your total sales and purchases
• The amount of VAT you owe
• The amount of VAT you can reclaim
• How much VAT that HMRC owes you (if you’re reclaiming VAT on business expenses)

HMRC publishes a helpful guide that gives lots of detail on filling in your VAT return. This includes everything from accounting for the sales of stocks and assets through to value of imports. As you’ll see, the guide is very complicated, which is why many businesses prefer to hire an accountant to do their VAT returns.

Step 5: pay your VAT!

The final step is to pay the VAT you owe to HMRC. It’s important to get this right. HMRC can charge you a penalty of up to 100% of understated or overclaimed VAT. You also need to be aware that HMRC can decide to investigate your VAT affairs. If this happens, it’s a good idea to have Tax Investigation Fee Protection. This can insure you for up to £100,000 in accountancy fees.

Summary

In some ways, it’s not too difficult to file a VAT return. MTD-compliant software simplifies the process to a great degree. However, if your tax affairs aren’t simple, it can be very easy to make mistakes. These can lead to penalties or, worse, tax investigations. So why risk it? Ask us about our VAT Returns Service. We’ll make sure your returns are accurate, compliant and submitted on time – every time!