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Tax30-60 minutesEasy

How to File a VAT Return

Step-by-step guide to completing and submitting your quarterly VAT return through MTD-compatible software.

What You'll Need

  • Complete accounting records for period
  • MTD-compatible accounting software
  • HMRC Government Gateway login
  • Bank account for payment/refund

Step-by-Step Guide

1

Reconcile your accounts

Ensure all sales and purchases for the period are recorded. Reconcile bank accounts and petty cash.

Tips
  • •Check all invoices are entered
  • •Verify VAT amounts are correct
  • •Look for missing bank transactions
2

Review VAT codes on transactions

Check that each transaction has the correct VAT treatment: standard rate, reduced rate, zero-rated, exempt, or outside scope.

Tips
  • •20% standard rate is most common
  • •Export services often zero-rated
  • •Some supplies are exempt (no VAT charged or reclaimed)
3

Check for errors and adjustments

Review any partial exemption calculations, bad debt relief claims, or prior period adjustments needed.

Tips
  • •Small errors can be corrected on return
  • •Large errors need separate disclosure
  • •Check for unpaid invoices over 6 months (bad debt)
4

Generate the VAT return

Use your MTD-compatible accounting software to generate the 9-box VAT return from your records.

Tips
  • •Box 1: VAT due on sales
  • •Box 4: VAT reclaimed on purchases
  • •Box 5: Net VAT (pay or reclaim)
5

Review the return before submitting

Check the figures look sensible compared to previous periods. Verify totals match your accounts.

Tips
  • •Compare to previous quarters
  • •Check for unusual spikes or drops
  • •Ensure sales figures match income
6

Submit through MTD software

Submit the return to HMRC directly through your accounting software's API connection. You'll receive instant confirmation.

Tips
  • •Cannot submit through HMRC website
  • •Keep confirmation for records
  • •Deadline is 1 month + 7 days after period end
7

Pay any VAT due

If Box 5 shows VAT to pay, set up payment to HMRC. Direct Debit is easiest - taken 3 days after deadline.

Tips
  • •Same deadline as filing
  • •Bank transfer or Direct Debit
  • •Late payment triggers interest
8

Receive any VAT refund

If you're due a refund (more VAT paid than collected), HMRC will pay into your nominated bank account.

Tips
  • •Usually paid within 30 days
  • •First repayment may take longer (security checks)
  • •Ensure bank details correct in HMRC account

Common Mistakes to Avoid

Missing the deadline (triggers penalty points)

Incorrect VAT codes on transactions

Not using MTD-compatible software

Submitting before reconciling accounts

Frequently Asked Questions

How often do I need to file a VAT return?

Most businesses file VAT returns quarterly, with the deadline being one month and seven days after the end of each VAT period. Some businesses file monthly or annually. Your filing frequency is set when you register and shown on your VAT certificate.

What is Making Tax Digital for VAT?

Making Tax Digital (MTD) requires all VAT-registered businesses to keep digital records and submit VAT returns using MTD-compatible software. You can no longer file VAT returns directly through the HMRC portal. This applies regardless of your turnover.

Can I correct mistakes on a previous VAT return?

Yes, if the net error is £10,000 or less (or up to 1% of your turnover, max £50,000), you can adjust it on your next VAT return. Larger errors must be reported to HMRC separately using form VAT652. Always correct errors promptly.

What records do I need to keep for VAT?

You must keep VAT invoices for all purchases and sales, a VAT account showing calculations, and digital records linking to your returns. Records must be kept for at least 6 years. MTD requires these records to be maintained in compatible digital software.

What happens if I file my VAT return late?

HMRC uses a points-based penalty system for late VAT returns. Each late submission adds a penalty point. Once you reach the threshold (4 points for quarterly filers), you receive a £200 penalty for each subsequent late return. Points reset after a period of compliance.

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