Submitting A VAT Return

March 14 2016, 0 Comments

HMRC Tax Return

If you are registered for VAT, you will need to submit a VAT return to HM Revenue and Customs (HMRC). A task that seems more complex than it actually is, this post breaks down the elements involved in completing and filling your quarterly VAT return.


Being VAT (Value Added Tax) registered means that you are collecting and paying over a tax to the HMRC. it is legal requirement to keep accurate VAT records .They must be submitted to the HMRC and you must pay over your owed amount. As a business, you will charge VAT on top of all of your vatable sales, to every one of your customers. It also enables you to reclaim the VAT you’ve been charged on purchases by other VAT registered businesses.

Registering for VAT

There are two ways of registering for VAT. You can either register online or you can send a paper form into the HMRC. If your Limited company has an annual gross income which exceeds the current VAT threshold, then you are required by law to register for VAT otherwise you will face penalties.

You will need the following information in order to register:

  • National Insurance number or a unique taxpayer’s reference
  • Certificate of incorporation/incorporation details
  • If relevant – The details of the acquired business transfer
  • Business bank account details
  • Turnover
  • Business Activity

Once registered you will receive a unique VAT registration number, your effective date of registration and you if you haven't already will need to create an account through the Government Gateway, which will allow you submit your return electronically. When in possession of your VAT registration documents, you’ll be given the dates of your first quarter, which may be a 2, 3 or even 4-month period. Each return period following this initial VAT submission will occur usually every 3 months though monthly or annually is also possible.

VAT Accounting Schemes

There will be different accounting schemes that will be more suited to your business however, regardless of which one you use, it is integral you keep organized, clear and precise records. This can be a made more manageable process by using bookkeeping software that systematizes your accounts for you. So what are the schemes?

VAT Cash Accounting – The figures entered onto the VAT return are taken from the dates the sales and purchase invoices are paid. This scheme is beneficial to your business in the cases where your customers are slow to pay.

Standard VAT Accounting – The figures entered on the VAT return are taken from the dates the sales and purchase invoices were issued. This means you will collect the VAT on sales invoices as soon as they are issued, even if they haven’t been paid, and you’d reclaim VAT on purchase invoices at the date of issue even if you haven’t paid them.

Flat Rate VAT Accounting – This reduces the amount of bookkeeping required, however you can’t reclaim VAT on your purchases. Depending on your business type, you are issued with a percentage rate which will be less than the standard rate. The VAT you pay to the HMRC is this percentage of your turnover. Your sales invoices show the standard VAT rate but you are not required to separate out the VAT when recording your purchases.

Filling Your VAT Return

Since April 2012, all new businesses are required to submit their VAT returns and any payments in regards to VAT, electronically. Below is a brief overview of what you will need to complete for your return. There are a series of boxes you must fill out once you have selected the correct form:

Box 1: VAT due on sales and other outputs
This is the total amount of VAT charged on sales (Output VAT)  and any other income during the period minus VAT amounts on any credit notes issued. Along with VAT due under reverse charge accounting if applicable.

Box 2: VAT due on other acquisitions from other EU countries
This is the total amount that you have paid in VAT on goods you have purchased from or to other EU countries.

You may also be entitled to reclaim this amount as input VAT and do so by including the relevant figure within the total at box 4

Box 3: Total VAT due
This is the sum of boxes 1 and 2, which will be automatically filled in for you during submission.

Box 4: VAT reclaimable on your purchases
In this box it will total the amount of VAT you’ve been charged (input VAT) and are reclaiming on business purchases during the period (minus any VAT on credit notes received).

You can reclaim on acquisitions of goods from VAT-registered suppliers in other EC member states (this must correspond with the amount declared within box 2) and any VAT you have paid under the reverse charge procedure

Box 5: Net VAT payable or reclaimable
This figure will be the difference between boxes 3 and 4. A positive figure is the amount owed to the HMRC. A negative figure is the amount owed to you from the HMRC. Again, this box is automatically when filled in online.

Box 6: Total sales excluding VAT
In this box you will need to declare the total sales figure for the period, without VAT along with reverse charge transactions.

Box 7: Total purchases excluding VAT
Total purchases figure for the period, without VAT. Also include in box 7 any amount you have entered in box 9 and reverse charge transactions.

Boxes 8 & 9: Total value of goods supplied or acquired from other EC Member States
These boxes only have to have a value (other than 0.00) if you’ve supplied or acquired goods from other EU countries. If this is the case, you must state the total value of goods acquired/received from the EC Member State including services or costs related such as deliver charges). VAT is excluded.

If you need further details, you can consult the box by box HMRC VAT returns page or seek accountancy support.

VAT Submission

A straight forward process once all of the boxes have accurately been completed (with the exact and correct figures), all you need to do is submit your VAT return. Once the HMRC receive your return, they will email you confirmation that this has been received. Payments will then be taken either by direct debit or you should make a manual payment. Refunds will be made either directly to your bank or a cheque is issued.

It is hugely important that you make the payments on time or you will be required to pay charges. VAT is not something to be taken lightly, so making mistakes or falsely submitting information can lead to serious consequences.