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
Reconcile your accounts
Ensure all sales and purchases for the period are recorded. Reconcile bank accounts and petty cash.
- •Check all invoices are entered
- •Verify VAT amounts are correct
- •Look for missing bank transactions
Review VAT codes on transactions
Check that each transaction has the correct VAT treatment: standard rate, reduced rate, zero-rated, exempt, or outside scope.
- •20% standard rate is most common
- •Export services often zero-rated
- •Some supplies are exempt (no VAT charged or reclaimed)
Check for errors and adjustments
Review any partial exemption calculations, bad debt relief claims, or prior period adjustments needed.
- •Small errors can be corrected on return
- •Large errors need separate disclosure
- •Check for unpaid invoices over 6 months (bad debt)
Generate the VAT return
Use your MTD-compatible accounting software to generate the 9-box VAT return from your records.
- •Box 1: VAT due on sales
- •Box 4: VAT reclaimed on purchases
- •Box 5: Net VAT (pay or reclaim)
Review the return before submitting
Check the figures look sensible compared to previous periods. Verify totals match your accounts.
- •Compare to previous quarters
- •Check for unusual spikes or drops
- •Ensure sales figures match income
Submit through MTD software
Submit the return to HMRC directly through your accounting software's API connection. You'll receive instant confirmation.
- •Cannot submit through HMRC website
- •Keep confirmation for records
- •Deadline is 1 month + 7 days after period end
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.
- •Same deadline as filing
- •Bank transfer or Direct Debit
- •Late payment triggers interest
Receive any VAT refund
If you're due a refund (more VAT paid than collected), HMRC will pay into your nominated bank account.
- •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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