How do I complete my VAT Return?

From the date of registration, a VAT registered business charges VAT on their taxable sales (known as output VAT). They may be able to claim some of the VAT charged on their purchases and other expenses (known as input VAT).

The business must pay to HMRC the difference between the output VAT and the input VAT. However, if the input VAT is higher than the output VAT the business will be due a VAT refund, which is repayable by HMRC.

The business must inform HMRC of the VAT which is due to be paid (or refunded) by submitting a VAT return.

VAT returns usually cover a three month period and the relevant dates will be shown on the return, for example, 1 January to 31 March.

Find out about tax changes to VAT for the current tax year.

If your business is relatively simple, you may well find that you’re able to complete your VAT return each quarter without any help.

The rules and regulations which govern the treatment of VAT can be very complex. They are detailed in a lengthy document called the VAT guide (via GOV.UK).

You need to be aware that:

• VAT can be charged at different rates
• Input VAT cannot always be claimed
• The penalties can be quite severe if you get it wrong
• There are specialist VAT schemes available to some businesses:
  • Flat rate scheme
  • Cash accounting scheme
  • Annual accounting scheme
  • Retail schemes

Further guidance on completion of the VAT return can be found on the GOV.UK website.

If you’re in any way unsure of how to complete the returns, it may be best to ask an accountant to do this for you.

A business must pay to HMRC the difference between the VAT on their sales invoices and the VAT on invoices they have received. This is regardless as to whether or not the business has actually received or paid the money.

Under the cash accounting scheme, businesses pay to HMRC the VAT collected on payments received from customers, rather than the amount of VAT invoiced. Input VAT is claimed on goods and services used, once payment has been made for them. Businesses are eligible to use the cash accounting scheme if their taxable turnover is less than £1.35 million per year.

If you’re using the cash accounting scheme, the spreadsheet download below can be used to help you when completing your VAT return.

These are the boxes of the VAT return that you will be asked to complete when you submit your VAT return online:

Submitted return – The final return will look as follows: boxes 3 and 5 have been automatically calculated.

VAT returns must be submitted to HMRC online and any VAT that is due must be paid electronically. To use this service, you will need to register online to submit your VAT return.  

The due date for the submission of your VAT return and to make any payment due is is usually one month and seven days after the end of the VAT period. You can sign up to receive email reminders that your VAT return is due via your online account.

You can find out how much VAT you will pay using our online calculator.

Net errors made in previous VAT periods can be corrected on later VAT returns if they are either:

• £10,000 or less, or
• £10,000 to £50,000 (but not exceeding 1% of your quarterly turnover)

A net error is the difference between the total errors in output VAT and the total errors in input VAT.