For businesses registered for VAT in the UK, submitting VAT returns is a vital part of staying compliant with HMRC regulations. While the process may seem daunting at first, learning how to file a VAT return online can save you time, reduce errors, and ensure you're always up to date with your tax obligations.
In this guide, Budget Accountants will break down the major steps to file your VAT return online, highlight important VAT return deadlines, and share practical tips to ensure you never miss a VAT due date again.
What Is a VAT Return?
A VAT return is a form submitted to HM Revenue and Customs (HMRC), usually every quarter, summarising the amount of VAT a business has charged and paid over a specific accounting period. It determines whether a business must pay VAT to HMRC or receive a refund.
All VAT-registered businesses are required to file VAT returns online, except in rare circumstances where HMRC provides an exemption.
How to File a VAT Return Online?
Filing a VAT return online has become the standard practice under the Making Tax Digital (MTD) initiative. Here's how to complete the process:
- Ensure You are Signed Up for Making Tax Digital (MTD)
Starting in April 2022, most VAT-registered businesses must adhere to the MTD rules. This means they need to use compatible software to efficiently manage their digital records and confidently submit their VAT returns.
If you have not already, sign up for MTD via the HMRC website. You will need your Government Gateway user ID and your VAT number.
- Choose MTD-Compatible Software
You will need approved accounting software such as Xero, QuickBooks, or Sage. These platforms empower you to efficiently manage your digital records and seamlessly submit your VAT returns directly to HMRC, ensuring accuracy and compliance every step of the way.
- Keep Digital Records
According to the Making Tax Digital (MTD) rules, businesses are required to keep digital records of their sales and purchases. This includes the time of supply (tax point), value of the supply, and the VAT rate charged.
- Submit Your Return Through the Software
At the end of each VAT period, your software will help you compile the required information. After reviewing the details for accuracy, you can file your VAT return online directly to HMRC.
VAT Return Deadlines: What You Need to Know?
Understanding the VAT return deadline is crucial; missing it could lead to unnecessary penalties!
In most cases, the VAT return due date is one calendar month and seven days after the end of your VAT accounting period. If your VAT quarter wraps up on 31 March, mark your calendar! You will need to submit your return and settle your payment by 7 May.
Key dates to keep in mind:
VAT Return Due Date: The due date for your VAT return typically falls on the 7th of the second month following the end of your accounting period.
VAT Payment Deadlines: Payments must reach HMRC's account by the same deadline as your return submission.
To avoid late penalties, make sure you allow time for payment processing. Keep in mind that BACS and direct debit payments might take a couple of working days to process.
Tips to Stay Ahead of VAT Deadlines
Staying compliant does not have to be stressful. Here are some effective strategies to help you stay ahead of your VAT deadlines and keep your finances in check:
Set Calendar Reminders
Mark your VAT return due dates in your calendar, and set reminders a few days before each one.
Use Automation Tools
Many MTD-compatible accounting platforms offer automatic reminders and scheduled filing options.
Schedule Payments in Advance
If paying by direct debit, make sure it is set up well before the VAT payment deadline. Payments usually leave your account three working days after your return is submitted.
Hire an Accountant or Bookkeeper
If you are short on time or unsure about VAT rules, consider using a professional to help manage your submissions. Budget Accountants is an accounting services provider company in Ashford, UK. They offer a range of services, including payroll, company accounts, tax planning and advice, and VAT return filing, etc, at competitive prices.
Penalties for Missing VAT Deadlines
Failing to meet VAT return deadlines can result in a surcharge or penalty, depending on how late the return or payment is and whether it's a recurring issue.
If this happens for the first time, HMRC may issue a warning. Repeated late returns or payments can lead to escalating fines. Filing on time helps protect your business from these unnecessary costs.
Conclusion
Whether you are new to VAT or looking to streamline your current process, learning how to file VAT return online is essential for running a compliant and efficient business. With digital tools, clear schedules, and an understanding of your VAT deadlines, staying on top of your tax obligations has never been easier.
By keeping track of your VAT return due dates and ensuring prompt submissions, you can avoid penalties and focus more on growing your business. If you are unsure where to start, consult your accountant or explore HMRC's online resources for additional support.
