If you’re VAT-registered and running a business, you’re required to submit a VAT return every three months. It’s one more piece of admin that you have to deal with, along with everything else. The good news is that it’s never been easier to file a VAT return online. Below, we’re going to cover all the details around meeting your duties and getting in your VAT return on time. 

What are the facts on VAT?

For most goods and services, they will have a Value Added Tax rate of 20%. There are two other bands of VAT, which cover 5% for some items as well as even zero-rate on others. 

You will be sending your VAT return to Her Majesty’s Revenue and Customs (HMRC) every three months through your financial year. The return will outline your earnings and expenses for that period as well as show any applicable value-added taxes. It will also give you an indication of what the business may be able to claim for reimbursement due to VAT on purchases. 

To be able to file your VAT return online, you will register on the UK government website and get a Government Gateway user ID. You will then be able to register and login to the relevant HMRC section. Registered business profiles will require an authenticator device or app to process their login. 

The digital tax revolution: Making Tax Digital

A few years ago, HMRC’s began an initiative to simplify and improve the process of submitting a VAT return. In recognition of the fact that life had become increasingly digital for individuals and businesses, they wanted to ensure that people could easily file a VAT return online. This is what is known as Making Tax Digital. As of 1 April 2022, all VAT-registered enterprises who meet an annual turnover of £85,000 must submit their returns online through an App. 

If your business has registered for MTD, you will no longer be able to file their VAT return online through the standard process. Rather, they will be required to used dedicated MTD-compliant accounting. Once you’ve made the change-over, the process is quite smooth and can even submit a VAT return directly using bridging software. 

It’s important to note that once you’ve become MTD-registered, you will have to continue filing through the relevant software even if your businesses annual turnover falls below the threshold. The only times that you will not need to file a return is if you deregister from VAT or if you can claim an exemption from MTD. 

Filing a VAT return online

Once you’ve registered and collected all needed files, you’re to submit your VAT return. There will be nine sections on the online form that you will need to fill out depending on whether they apply to you or not. It will outline all VAT that is due this period as well as any VAT you’re trying to reclaim. You will also need to specify whether you have made purchases or sales from Northern Ireland to EU Member states. The information you need to supply, and the overall fields of the form will change if you are on a special VAT accounting scheme – like the Flat Rate VAT Scheme – so it’s important to check how this changes things before you begin your return. The UK government website can tell you how this will change specific items. You may need assistance from an accountant. Soon to be accountants ensure their success on the CPA Exam with a comprehensive review and knowing fully well what the CPA exam requirements are.

I filed a late VAT return, what now? 

A single missed deadline is no problem as there will be no penalty, fine or surcharge. This changes, however, if you default more than once within a financial year. The specific amount that you will be fined is affected by whether your annual turnover is above £150,000. It will also be dependent on the exact amount of owed VAT. You may be able to avoid a penalty even if you have filed a late return so if your VAT bill is still paid by the deadline.