A VAT return is a report submitted to HMRC (HM Revenue & Customs) that summarizes the VAT a business has charged on sales and the VAT it has paid on purchases. The difference determines whether the business must pay VAT to HMRC or receive a refund.
Who Needs to File VAT Returns?
If your business is VAT-registered (mandatory for businesses with taxable turnover over £90,000 per year in 2024-25), you must file VAT returns, even if you have no VAT to pay or reclaim.
How Often Do You Need to Submit a VAT Return?
Most businesses file VAT returns quarterly (every three months), but some may opt for monthly or annual submissions under specific VAT schemes.
How to Submit a VAT Return?
- Keep Accurate Records – Maintain proper invoices and receipts for sales and purchases.
- Calculate VAT – Determine VAT collected from customers and VAT paid to suppliers.
- Use MTD (Making Tax Digital) – Businesses must submit VAT returns through MTD-compatible software.
- Submit on Time – Returns are usually due one month and seven days after the end of the VAT period.
Common VAT Schemes
- Standard VAT Accounting – VAT is reported and paid on invoices issued.
- Flat Rate Scheme – A simplified scheme where businesses pay a fixed percentage of turnover.
- Cash Accounting Scheme – VAT is paid only when invoices are paid, helping with cash flow.
- Annual Accounting Scheme – Businesses submit one return per year and make advance payments.
Penalties for Late VAT Returns
Late VAT submissions or payments can lead to penalties and interest charges under the HMRC points-based penalty system. Regular compliance helps avoid unnecessary costs.
Need Help with VAT Returns?
At BB Accountancy, we simplify VAT compliance, ensuring accurate submissions and timely filings. Contact us today for professional VAT return services and expert tax advice!