How to submit a VAT Return in the UK

How to submit a VAT Return in the UK

If your business is VAT-registered, you’ll need to submit a VAT Return to HMRC, typically every three months. This return details the Value Added Tax you’ve charged customers and paid to other businesses. HMRC will calculate your VAT bill and inform you of the amount you owe or any refund due.

In this article, we cover how to complete and submit a VAT Return online or through software. We also explain who is eligible to file a paper VAT Return, the specific rules for those using the Annual Accounting Scheme, and the steps for paying your VAT bill on time.

Preparing and filing a VAT Return for your business

A VAT Return is a tax form submitted to HMRC, where you report the amount of Value Added Tax (VAT) your business owes. It includes the VAT you’ve charged on sales and the VAT you’ve paid on purchases for your business.

Typically, you need to submit a VAT Return every three months, corresponding to your VAT accounting period. The deadline for filing is 1 month and 7 days after the end of each quarterly period.

If you’re using the VAT Annual Accounting Scheme, you only need to submit one VAT Return per year, with a filing deadline 2 months after the close of your 12-month accounting period.

Based on the information you provide on the VAT Return, HMRC will determine whether you owe VAT or are eligible for a refund. The amount payable (or refundable) is typically the difference between the VAT you’ve paid to other businesses (input VAT) and the VAT you’ve charged your customers (output VAT).

If your output VAT exceeds your input VAT, you’ll need to pay the difference to HMRC. Conversely, if your input VAT is greater than your output VAT, HMRC will usually refund the difference to you.

How do I submit a VAT Return?

Since the introduction of Making Tax Digital (MTD) for VAT, nearly all VAT-registered businesses in the UK are required to submit their returns online or through MTD-compatible software. Exceptions are granted only to those who are exempt or have successfully applied to HMRC for an exemption.

Therefore, you’ll most likely need to file your VAT returns electronically using one of the following methods:

Through commercial accounting software that is compatible with Making Tax Digital
By appointing an accountant or agent to file on your behalf
By logging into your VAT online account and selecting ‘Complete return’ under the VAT section. This option is only available if you use the VAT Annual Accounting Scheme

You can submit a paper VAT Return only if you:

Object to using computers on religious grounds
Are unable to use computers due to age, a disability, or lack of internet access where you live
Can provide another valid reason why it is not reasonable or practical for you to use a computer, software, or the internet

Additionally, your business is automatically exempt from filing online if it is subject to an insolvency procedure and does not have a Company Voluntary Arrangement or Individual Voluntary Arrangement in place. If you have either arrangement, you can choose whether to submit your VAT Return on paper or online.

HMRC may impose a penalty of up to £400 if you file a paper VAT Return without being eligible to do so.

How to complete a VAT Return

Whether you complete your VAT Return through software, online, or on paper, the form will include nine boxes. However, not all of these boxes are relevant to every business, so you only need to fill in the ones that apply to you.

If you use software to file, it will automatically pull the necessary figures from your digital records and populate the return boxes accordingly.

You can find detailed instructions for filling out each box on your VAT Return on GOV.UK, but we’ve provided a summary below to give you an overview of the information you’ll need to provide.

Box 1 – VAT due in the period on sales and other outputs

Include the VAT due on all goods sold and services provided during the accounting period covered by the return. This amount represents your output VAT for that period.

VAT may also be due on items outside your business’s standard activities, such as goods taken for personal use, supplies provided to your staff, and the sale of business stock and assets.

Box 2 – VAT due in the period on acquisitions of goods made in NI from EU member states

This box is relevant only for businesses based in Northern Ireland (NI). It includes the VAT due on goods (and related costs) purchased from VAT-registered suppliers in EU member states.

Related costs encompass any payments made to cover a supplier’s expenses, such as packing, transport, or insurance, which they are responsible for under the terms of your contract.

Box 3 – Total VAT due

In this section, you need to calculate your total VAT by combining the amounts from boxes 1 and 2. This represents your output VAT for the accounting period.

Box 4 – VAT reclaimed in the period on purchases and other inputs (incl. acquisitions from the EU)

This is the total amount of deductible VAT on goods and services purchased by your business during the accounting period, representing your input VAT. Be sure to include any VAT reclaimed on imports that you accounted for through postponed VAT accounting during this period.

Box 5 – Net VAT to pay to HMRC or reclaim

This box reflects the amount of VAT you owe to HMRC or the amount you need to reclaim. To calculate it, subtract the smaller figure between boxes 3 and 4 from the larger one and enter the difference in box 5.

If the amount in box 3 is greater than in box 4, the difference is the amount you need to pay to HMRC. If box 3 is less than box 4, HMRC will credit your account and refund the balance.

Box 6 – Total value of sales and all other outputs excluding any VAT

This box displays the total value of your business sales and other specific outputs (excluding VAT). However, do not include personal funds contributed to the business, insurance claims, loans, dividend income from shares, monetary gifts, or Stock Exchange dealings (unless you are a financial institution).

Box 7 – The total value of purchases and all other inputs excluding any VAT

This box reflects the total value of your business purchases and expenses (excluding VAT). It includes the value of imports, acquisitions of goods brought into Northern Ireland from EU member states, and transactions subject to the ‘reverse charge’ mechanism.

Box 8 – Total value of all supplies of goods and related costs (excl. any VAT) to EU member states

This box displays the total value of goods supplied from Northern Ireland to EU member states (excluding VAT), along with any directly related costs, such as freight or insurance, that were included in the invoice or contract price.

You must include the value of any goods dispatched from Northern Ireland to an EU member state, even if no sale occurred or if the sale was invoiced to someone outside the EU.

The figures entered in this box should also be included in the total for box 6.

Box 9 – Total value of all acquisitions goods and related costs (excl. any VAT) from EU member states to NI

This box represents the total value (excluding VAT) of all goods purchased from VAT-registered suppliers in EU member states, along with any directly related costs included in the invoice or contract price.

You must include the value of:

Acquisitions made within the VAT return period in which the tax applies
Goods installed or assembled in Northern Ireland that were dispatched from an EU member state

Do not include the value of:

The goods themselves when supplying processing work
Services related to acquisitions that have been invoiced separately
Separate supplies of services

The figures entered in this box should also be included in the total for box 7.

When you have filled in the relevant boxes

After entering all the necessary information in the relevant boxes on your VAT Return, carefully review the details to ensure all figures and calculations are accurate. If needed, you can go back and correct any errors. Once you’ve confirmed that everything is correct, submit your return to HMRC.

If you notice a mistake after you submit a VAT Return

Once you submit a VAT Return to HMRC, you cannot amend it. However, you can correct errors by making an adjustment in your next VAT Return, provided the net value of the mistake is:

£10,000 or less
Between £10,000 and £50,000, as long as it’s less than 1% of the total value of your sales (the net outputs figure shown in box 6 of the incorrect return)

You must notify HMRC separately about any net errors on your VAT Return if they are:

More than £50,000
Greater than £10,000 if they exceed 1% of the total sales value
Deliberate errors

To calculate the net value of VAT errors from previous returns, determine:

The total amount of VAT owed to HMRC (if any)
The total amount of VAT refundable to you (if any)

The net error is the difference between the additional VAT owed to HMRC and any VAT refunds due to you.

HMRC offers detailed guidance on correcting VAT errors, amending your VAT records, and claiming refunds if you have overpaid VAT. If you need assistance with corrections or have questions, you can contact the VAT General Enquiries Team for advice.

Paying your VAT bill

After submitting your VAT Return, you’ll need to pay any VAT owed to HMRC by the payment deadline, which is typically 1 month and 7 days after the end of your accounting period—this should match your filing deadline.

If you’re using the Annual Accounting Scheme or making payments on account (advance payments toward your VAT bill), your deadlines may differ. HMRC will require payments on account if you file quarterly returns and owe more than £2.3 million within any 12-month period.

You can sign in to your VAT online account (also known as your business tax account) to:

View your deadlines for submitting VAT Returns
Check when your VAT payments must clear HMRC’s account
Review and appeal any penalties

You must pay your VAT bills online using one of the following methods:

Approving the payment through your bank account via online banking
Debit or business credit card
Direct Debit

When making payments, you’ll need to provide your 9-digit VAT registration number, which HMRC uses to identify your business and apply payments to your VAT account.

To ensure your payments clear on time, you can use HMRC’s VAT payment deadline calculator. Missing the deadline may result in penalties.

If you are due a VAT refund, HMRC typically processes the repayment within 30 days of receiving your VAT Return.

If you cannot pay your VAT bill on time

When you miss a VAT deadline or know you won’t be able to pay your VAT bill on time, it’s important to contact HMRC as soon as possible.

If you’re unable to pay the full amount, HMRC may allow you to set up a payment plan, enabling you to pay what you owe in instalments. This arrangement is known as a ‘Time to Pay’ agreement.

If you use the VAT Annual Accounting Scheme

Since November 2022, businesses can only submit VAT returns online if they are using HMRC’s VAT Annual Accounting Scheme. This scheme is available only to businesses with an estimated VAT turnover of £1.35 million or less over the next 12 months. By joining this scheme, you’ll make monthly or quarterly advance payments towards your VAT bill and submit just one VAT Return per year.

HMRC will estimate your advance payments if you’re new to VAT or base them on your previous returns. For monthly payments, each installment will be 10% of your estimated VAT bill, while quarterly payments will be 25% of the estimated amount.

You’ll then make a balancing payment when you file your VAT Return. This final payment covers the difference between what you’ve paid in advance and the actual amount owed, as indicated on your VAT Return. If you overpay during your accounting period, you can apply to HMRC for a refund.

If you’re considering joining the Annual Accounting Scheme, it’s advisable to consult an accountant first. This scheme may not be suitable if your business frequently reclaims VAT, as you’ll only be eligible for one refund per year, following the submission of your VAT Return.

What happens if my VAT Return or payments are late?

If HMRC receives your VAT Return after the filing deadline or you are late paying your bill, you may incur VAT penalties or interest.

For VAT accounting periods beginning on or after 1 January 2023, you:

Will be charged late payment interest on any outstanding amount you owe
May face late payment penalties if you don’t pay your VAT bill by the deadline
Could be subject to late submission penalties if you fail to submit your VAT Return on time

If your VAT record-keeping is meticulous and you use an accountant, you can greatly reduce the risk of late VAT returns and missed payments.

Start your company in the UK with Startxpress!

Do you have any other questions?

The first time you submit a VAT Return can be daunting, especially if your tax affairs are complex. However, if your business income and expenditures are relatively straightforward, completing and filing your VAT returns each quarter may be a simple process.

If you’re unsure or don’t feel confident handling VAT on your own, it’s wise to consult an accountant for professional help and guidance. This will minimize the risk of errors or late filings, and they can also identify tax-saving opportunities for you and your business. Startxpress can also assist you with VAT-related matters, providing the expertise you need to navigate the process smoothly.

For more details, visit the Startxpress Help Center and Blog. If you have further questions, contact us at support@startxpress.io!

Related Articles

Was this helpful?

0 / 0

Share this article