Everything You Need to Know About Filing VAT Returns
- Even Solutions Accountancy
- Dec 18
- 5 min read
A VAT (Value Added Tax) return is a form you submit to HMRC to report the amount of VAT you've charged on sales and paid on purchases. It tells HMRC whether you owe them money or are due a refund.
If your business is VAT-registered, you must file a VAT return — usually every quarter. It's a legal requirement, and getting it right helps you:
Stay compliant with tax regulations
Avoid penalties or fines
Reclaim VAT on eligible expenses
Keep your business finances in good shape
Many small businesses find VAT confusing at first, but with the right support and systems, it becomes a routine process.
When Does a Business Need to Register for VAT?
In the UK, a business must register for VAT if its taxable turnover exceeds £90,000 (as of April 2024). You can also voluntarily register below this threshold, which may be beneficial if you deal with other VAT-registered businesses or want to reclaim VAT on purchases.
Once registered, you’ll receive a VAT number and need to:
Add VAT to your prices (usually at 20%)
Issue VAT invoices
File VAT returns (typically quarterly)
Keep proper VAT records
If you're unsure whether you should register, we can help assess your situation.
VAT Return Deadlines and Penalties
VAT returns are usually due one calendar month and seven days after the end of your VAT accounting period. This is also the deadline for payment.
Example: If your VAT period ends on 31 March, the return and payment are due by 7 May.
Missing deadlines could result in:
Late submission penalties
Interest on unpaid VAT
Surcharges for repeated non-compliance
Tip: Use reminders or automated software to stay on top of your deadlines.
A Step-by-Step Guide to Filing Your VAT Return
Let’s walk through the VAT return process so you can see exactly what's involved.
1. Keep Your Records Organised
Start by collecting all the invoices, receipts, and statements for the VAT period. You'll need:
Sales invoices showing VAT charged
Purchase invoices showing VAT paid
Bank statements and expenses
Good bookkeeping is key — whether you manage it yourself or work with an accountant.
2. Calculate Output VAT
Add up the VAT you charged your customers during the VAT period. This is your output VAT.
3. Calculate Input VAT
Add up the VAT you paid on business expenses (e.g. stock, equipment, fuel). This is your input VAT.
4. Work Out the Difference
Output VAT – Input VAT = VAT to pay or reclaim
If your output VAT is higher, you owe the difference to HMRC.If your input VAT is higher, you can request a refund.
5. Submit Your VAT Return Online
You must use HMRC's Making Tax Digital (MTD)–compatible software to submit your return. Tools like Xero or FreeAgent can automate calculations and reduce errors.
6. Pay HMRC (if due)
Ensure payment is made by the deadline using your preferred method — direct debit, bank transfer, or through accounting software.
Common Mistakes to Avoid When Filing VAT
VAT can be tricky, and even small errors can lead to penalties or lost refunds. Here are some mistakes we often see — and help our clients avoid:
Charging the wrong VAT rate (e.g. applying 20% when goods should be 5% or 0%)
Missing invoices or receipts that contain reclaimable VAT
Mixing personal and business expenses, which could invalidate a claim
Late submissions due to poor record keeping or lack of reminders
Incorrectly reclaiming VAT on items like entertainment or vehicles, which may have special rules
Even if you feel confident doing it yourself, having your return reviewed by a qualified accountant can be a smart move.
Do I Need an Accountant to Do My VAT Return?
Many business owners wonder if they need professional help to file their VAT returns. The answer depends on your business size, complexity, and confidence with accounting.
When You Might Need an Accountant
Complex transactions: If your business deals with multiple VAT rates, international sales, or partial exemptions, an accountant can help ensure accuracy.
Time constraints: Outsourcing VAT returns frees up your time to focus on running your business.
Avoiding errors: Accountants can help prevent costly mistakes and penalties.
Tax planning: They can advise on VAT schemes that might benefit your business.
When You Can File Yourself
If your business has straightforward sales and purchases.
You use accounting software that guides you through the process.
You have a good understanding of VAT rules.
Even if you file yourself, it’s wise to consult an accountant periodically to review your VAT processes.
Tips for Making VAT Return Filing Easier
Filing VAT returns doesn’t have to be stressful. Here are some practical tips to streamline the process:
Keep digital records: Use cloud accounting software to store and organise invoices and receipts.
Reconcile regularly: Match your sales and purchase records monthly to avoid last-minute surprises.
Understand VAT schemes: Explore schemes like Flat Rate or Annual Accounting to simplify VAT calculations.
Set reminders: Use calendar alerts for VAT deadlines.
Train your team: If you have staff handling accounts, ensure they understand VAT requirements.
Seek professional advice: Don’t hesitate to get help if you’re unsure about any aspect of VAT.
By following these tips, you can reduce errors and make VAT return filing a routine part of your business operations.
What Happens After You File Your VAT Return?
Once you submit your VAT return, HMRC will process it and update your VAT account. If you owe VAT, you must pay it by the deadline to avoid interest and penalties. If you are due a refund, HMRC will usually pay it within a few days.
Keeping Records for VAT
You must keep VAT records for at least six years. These include:
Sales and purchase invoices
Credit notes
VAT account records
Import and export documents
Good record-keeping supports your VAT returns and helps if HMRC requests an audit.
Dealing with VAT Inspections
HMRC may occasionally inspect your VAT records. Being organised and accurate reduces the risk of issues during an inspection.
Filing VAT returns is a vital part of running a VAT-registered business. With the right knowledge and tools, you can handle your VAT returns confidently and efficiently. Stay organised, meet deadlines, and seek help when needed to keep your business compliant and avoid unnecessary stress.
Need Help Filing VAT Returns?
At Even Solutions Accountancy, we make VAT simple. Whether you're a sole trader, freelancer, or limited company, we offer tailored VAT support that works around you.
We:
Set you up with the right VAT scheme
Help you choose and manage cloud software
Prepare, review and submit VAT returns
Offer year-round support and advice
